The Commonwealth of The Bahamas is an independent, sovereign nation, consisting of 700 islands (35 of which are permanently inhabited) and 2,400 cays and rocks, extending in a southeasterly direction from Florida to Haiti. The archipelago covers some 233,000 square kilometers of the Atlantic Ocean, but have a total land area of 13,940 square kilometers, which is larger than the island of Trinidad but smaller than the state of Connecticut. Some of the islands are barely 65 kilometers from the United States or Cuba.
The Bahamas obtained its independence from Britain in 1973, and before that was internally self-governed for a considerable period. At the same time, The Bahamas is a member of the Commonwealth, and recognizes the Queen as its head of state, with her representative being the Governor General, who is appointed by the Bahamas government.
Political independence is considered one of its strengths, as an international financial center, in contrast to the colonies, territories, and dependencies elsewhere, which continue to be under the control of a metropolitan colonial power. Therefore, one does not have particularly to concern oneself with the consequences of membership of the European Union (EU) and other possible conflicts of interest, which arise because of the colonial power’s control and international relations.
The Bahamas has been a well-established, highly respected and sophisticated, international financial center for more than sixty years, built on the common law, political stability, tax neutrality, a thorough regulatory environment, a modern infrastructure, excellent communications, and proximity to North America. It is one of the oldest, continuous parliamentary democracies in the Western Hemisphere. Having been the landfall of Columbus in the New World in 1492, the Bahamas saw the permanent convening of its Parliament in 1729, after two centuries of colonial upheaval. The courts and the justice system are very highly regarded; they have applied the common law and developed a jurisprudence which has maintained the integrity of the nation’s livelihood in financial services. Financial services are the next most important economic sector after tourism. Throughout its history, The Bahamas has had no taxes on sales, income, companies, capital gains, inheritance, and other fields common in the metropolitan countries, which may be a legitimate disincentive for investment from abroad. Customs duties are the most important source of government revenues. Therefore, The Bahamas has served, and continues to serve, as a tax neutral platform for international business.
The Bahamas is a member of major international organizations, ranging from the United Nations to the Basal Committee. In response to certain international financial centers by the Organization for Economic Cooperation and Development(OECD), the Financial Action Task Force (FATF), and the Financial Stability Forum (FSF), The Bahamas has become one of the most highly regulated, anti-money laundering jurisdictions. By the end of 2000, it put in place a new financial architecture, even though a sophisticated anti-money laundering regime was already in effect.
WHY THE BAHAMAS
The Bahamas has been an independent nation since 1973 and is one of the oldest, most stable democracies in the Western Hemisphere, with more than 280 years of uninterrupted parliamentary democracy. Conveniently located in the same time zone as New York and Miami, The Bahamas is an ideal location for investment and business operations looking for a hub to invest and operate in, and from, the Americas. The Bahamas is home to approximately one-third of the world’s top 100 banks – and easily accessible to international financing and global capital markets.
The importance of banking and finance to the Bahamian economy far exceeds references to absolute size. Ranking second only to tourism, the sector contributes an estimated 15% of the country’s Gross Domestic Product (GDP).
Over the years, two of the major underlying benefits of having a competitive banking and financial sector have been the steady development of human resource infrastructure in tandem with evolving professional and technical service demands, and the promotion of telecommunication advancements, which have kept the sector apace with the rest of the world.
The Bahamas is home to over 270 licensed banks and trust companies including seven of the world’s top eight private banks and 35 of the top 100 global banks. North American banks have been doing business in The Bahamas for more than a century and European and Swiss banks have deep roots established over more than 70 years;
Financial institutions from other regions with growing economies are recognizing the advantages of operating in The Bahamas and will be an important part of the country’s financial services landscape in the years ahead;
The range of professional investment management services available in The Bahamas is similar to that found in the world’s leading financial centers such as New York, London or Hong Kong;
There are over 120 broker-dealers and investment advisory firms that offer investment management services, custodial services, corporate services and registrar and transfer agent services. More than 60 fund administrators provide fund administration, corporate services and registrar and transfer agent services. In excess of 700 Funds are licensed in The Bahamas, with assets under management totaling over $200 billion.
It is not by chance that The Bahamas is the most successful international financial center, considered to be the Switzerland of the Caribbean today. More than 80 years of thought, effort and co-operation have produced ideal conditions for High and, indeed, Ultra High Net Worth individuals, families and businesses to manage their wealth efficiently in comfort and style.
The country’s mature financial services industry, established infrastructure, progressive government, tax neutral environment and luxury lifestyle all have been cultivated very carefully to satisfy the specific needs of this most exclusive clientele.
The Friendly Society is fully licensed by the Bahamas Government to lawful and legally engage in the above-described activities.
The Bahamas is an active participant in multilateral organizations established to set and monitor standards for regulation and Anti-Money Laundering and Countering of Terrorist Financing (AML/CFT);
The Foreign Account Tax Compliance Act (FATCA) was added to the United States’ Internal Revenue Code and signed into law on March 2010 as a part of the US Hiring Initiatives to Restore Employment Act. The goal of FATCA is to deter tax evasion by imposing information reporting requirements on financial institutions throughout the world with respect to U.S persons with accounts at those institutions. Financial institutions that do not comply with the FATCA requirements will be deemed “non-Participating Foreign Financial Institutions” and will face a 30% withholding tax on all of their U.S source payments. In order to facilitate the reporting requirements, the Government of The Bahamas entered into an inter-governmental agreement (IGA), COPY ATTACHED, with the United States that details what, when and how information is to be exchanged.
For purposes of U.S. FATCA, a Friendly Society is considered a Compliant Non-Reporting Bahamas Financial Institution and will not need to register or obtain a Global Intermediary Identification Number (GIIN), or carry out the due diligence and reporting requirements under the US Agreement. This maintains strict membership confidentiality, which is extremely valuable. Fusion Bank will not be subject to the withholding tax imposed on US source receipts by Section 1471 of the US Internal Revenue Code.
Virtually every political organization, campaign, church, small business or professional organization in The Bahamas is organized as a Friendly Society.
The Friendly Societies Act states, in part, “It shall and may be lawful for any number of persons to form themselves into a society for their mutual relief; to raise funds for that purpose; to make, alter and amend rules for the government and guidance of the same; and to inflict fines and penalties upon members of such society, who shall or may offend against such rules.”
“Societies may be established under this Act, for any of the following purposes (that is to say) —
(a) [BANKING] for the relief, maintenance or endowment of the members, their husbands, wives, children, kindred or nominees, in infancy, old age, sickness or widowhood;
(b) [INSURANCE] toward making good any loss sustained by the members by fire, flood, or shipwreck, or by any contingency, whereby they shall have sustained any loss of or damage to their live or dead stock, or goods, or stock-in-trade, or the tools or implements of their trade or calling;
(c) [INVESTMENTS] for the frugal investment of the savings of the members, for better enabling them to purchase food, clothes or other necessaries, or the tools or implements of their trade or calling, or to provide for the education of their children or kindred:
(d) for any other purpose which shall be certified to be legal by the Attorney-General, and which shall be allowed by the Minister, as a purpose to which the powers and facilities of this Act ought to be extended.