Business

'Tens of thousands of jobs at risk'

Bahamian PM hits back at efforts to destroy offshore financial sector

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Friday, April 04, 2014    

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Bahamian Prime Minister Perry Christie yesterday warned that tens of thousands of Caribbean citizens could become impoverished if the region's offshore financial services sector is destroyed.

Christie, speaking at the Third Caribbean Conference on the International Financial Services Sector in Nassau, made the declaration against the background of criticisms of the region's offshore financial sector as tax havens with inadequate regulation, making them a dumping ground for financial criminals.

"Some have used their power either unilaterally or in small groups of high-powered nations to impose their will, arguing that there is something fundamentally immoral, something intrinsically sinister, about the accumulation of wealth in offshore jurisdictions," said Christie, reiterating a point he made last year in his address to the General Assembly of the United Nations in defence of IFCs in the region.

"We reject that premise and we criticize in the strongest possible terms the efforts of some to maim and cripple, if not destroy, the offshore economies within our region."

To the contrary of the criticisms, Christie argued that many of the regionâs anti-money-laundering, anti-terrorism funding, and anti-criminal regulatory regimes are "far more robust and demonstrably far more effective than the corresponding regulatory regimes in many of the same countries that are leading the fight against us."

Bahamas has one of the Caribbean's leading IFCs, behind the famed Cayman Islands. Indeed, after tourism, the financial services industry of The Bahamas is the country's second largest industry, accounting for almost 20 per cent of GDP. Barbados and Antigua are among the other regional countries that have relatively vibrant IFCs, which provide tax advantages to international investors.

"We believe that the sector represents true tax competition and, in the great majority of cases, it affords an honest opportunity for families and individuals alike to protect their privacy while accumulating lawfully earned capital for themselves and future generations," Christie argued.

He added: "To destroy this sector in the Caribbean would effectively cause tens of thousands of newly empowered middle-class citizens to slip back into poverty or to migrate to the developed world."

Ryan Pinder, the financial services minster of The Bahamas, said the country has a very serious approach to the preservation of the industry, to ensuring that it is regarded as well regulated and that its rules are consistent with international best practices.

Pinder supported his argument by noting, for example, that the International Monetary Fund (IMF) declared recently in its Financial Sector Assessment Programme that financial system oversight in the Bahamas has improved greatly over the last decade. He added that The Bahamas has been a leader in complying with international initiatives aimed at facilitating information exchange in an effort to protect against instances of global financial crime and tax evasion.

Among these international initiatives is the controversial Foreign Account Tax Compliance Act (FATCA), which demands that foreign banks provide information to America's Internal Revenue Service (IRS) on any customer deemed a "US person" if they have more than US$50,000.

ãIn each instance The Bahamas has preserved its reputation and integrity by complying with the international best practices, undertaking its responsibility in the fight against financial crime and adhering to the principle of working in an environment where there is level playing fieldâ" said Pinder at the conference held at the British Colonial Hilton Hotel in Nassau.

The three-day conference was being hosted by the Ministry of Financial Services of The Bahamas in collaboration with Caribbean Export Development Agency (CEDA).

CEDA executive director Pamela Coke Hamilton said, given the significance of the financial services sector to the region's development, the regional agency is committed to working with stakeholders to find solutions to the challenges facing the sector, particularly its label as a tax haven that has given it a "distorted and negative perception", she said.

"Called upon to assume a more integral role in defending the interests of the regional financial sector, Caribbean Export has from the outset offered its support," said Coke Hamilton, noting that it is part of the task force for the promotion and protection of the Caribbean financial services sector.

However, the CEDA boss urged regional IFCs to play their part in shaping the environment in which they function and continuously focus on increasing competitiveness.

"I would therefore like to challenge our regional IFCs to move beyond stating grievances about external threats and move towards finding practical (solutions) for keeping the sector vibrant," she said. "We may try to mitigate the global threats we face as a region, but there is only so much we can control. What we can control, however, are the competitive positions of the IFCs which operate in our member states."

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