Business

Hold parents responsible, lawyer says

January 21, 2015

Halsbury Chambers Partner Nerissa Greene has called for parental responsibility laws - citing the view that imposing stricter penalties on parents would reduce the ailments which presently exist in The Bahamas - and the creation of a sex offender's registry in The Bahamas.
As Greene pointed out at the recent Caribbean regional conference by the International Society of Family Law, in recent decades the number of persons under the age of 18 who commit serious criminal offenses has increased significantly, pushing the issue of parental accountability into the forefront.
"The age of parental accountability is one such area in need of imminent consideration. In The Bahamas, no parental responsibility has ever been legislated."
Greene noted that the general rule has been that a parent is not responsible for the acts of a child. Still, she queried whether parents ought not be held partially responsible for the act or actions of children.
"It could even be said, had the parent properly supervised the child, those crimes would not have happened," she said, referencing societies where the laws now hold parents or guardians financially responsible for the actions of children under the age of 18, particularly in cases where injury is caused or there is damage to property.
"This is also a vexing problem in our country and legislation should be considered to make parents legally accountable for the actions of children," Greene said.
Parental accountability laws would hold parents legally responsible for crimes committed by their children and operate on the premise that parents firstly have a legal duty to prevent their children from committing crime, and secondly that increasing parental accountability is an effective way to positively impact the juvenile crime rate.
"The objective is...to make parents accountable for their children and in turn reduce the rate of crimes or tortious acts by unsupervised and neglected children," explained Greene.
She added there is a need in The Bahamas for a sex offender's registry, which she said remains absent in practice. The term "sex offender" is a term used to define an individual found to be a sexually violent predator, one who has been convicted of the kidnapping, molestation, exploitation, seduction or solicitation of a minor.
Legislation governing sex offenders also makes provisions to protect former and potential victims by regulating the distance a registered sex offender may live from the dwelling place of a victim or from places where minors frequent such as schools or parks.
"The sex offenders registry ought to not only target local criminal offenders, but it also has to target the international criminal offenders who visit the shores of The Bahamas or intend to become residents of The Bahamas," Greene told the conference, noting that courts across the world are flooded with cases which detail the sexual abuse of children at the hands of strangers but more often by the hands of family members.
What she deemed deficiencies in local laws are amplified by the strides being made in other jurisdictions: the United States, Australia, New Zealand and the United Kingdom have compiled such registries with a view to protecting the most vulnerable in their societies.
"But the question is what are we doing in The Bahamas about this? How have we protected the ones we claim to be the future leaders of tomorrow? What have we done to legislate the protection of the innocence of a child?" Greene questioned.
"It is widely accepted that our present family laws require reform and the legislation regarding the rights and protection of children appears to be lacking teeth, so to speak," she said.

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Govt, Bahamas Striping draft 50 million MOU

January 21, 2015

A local roadwork firm yesterday announced that it has secured a draft memorandum of understanding (MOU) with the Ministry of Finance for a $50 million series of public-private partnerships (PPP) designed to overhaul the country's road and runway infrastructure.
The Bahamas Striping Group of Companies (BSGC) Managing Director Allen Albury stated that the two proposed PPPs with the government had the potential to generate over 700 jobs over a three-year implementation period should the MOU be signed.
"This means enhanced safety of our aviation infrastructure across the country as well as improving the safety of our road networks. It is a comprehensive approach, one that will bring economic impact to the Family Islands. We will be hiring locals from each island and in each of the islands we're looking at a minimum of 75 persons being hired," said Albury.
The first PPP would renovate 10 family island airport runways to be compliant with the International Civil Aviation Organization (ICAO) and Federal Aviation Administration (FAA) regulations, while the other would maintain family island roads through BSGC's newly promoted Rejuvaseal asphalt product.
Officials from BSGC and their American partners Hi-Lite Global stated that they had received the draft MOU last week and had recently submitted testing data for the product to the Ministry of Works after conducting tests in Rock Sound, Eleuthera. Hi-Lite Airfield Services Director of Business Development for the Caribbean Brad Dunn claimed that the product could extend the longevity of both road and runway pavements upwards of seven years.
"This is a new market for us to do this testing, we're very excited that we had good results for all of the testing and it looks like we're going to get to move forward based on those results," said Dunn.
Hi-Lite Global President John McNeely stressed Hi-Lite's commitment to offering its expertise to train Bahamians in asphalt rejuvenation. Regarding project financing, McNeely noted that the group is in talks with the Eximbank to secure a deal for the PPPs before 2016.
"As the process moves forward, we expect to close this deal before year end. We're really excited about partnering here in The Bahamas," said McNeely.
The project will impact a host of Family Islands including Abaco, Eleuthera, Acklins, and the Exumas.

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Demystifying VAT for SMEs: GBPA and Chamber collaborate

January 21, 2015

FREEPORT, Grand Bahama - Three weeks into 2015 and the topic of value-added tax (VAT) continues to intensify. Generally there are two business categories: those who have registered and wonder...what's next, and those that have little to no understanding of VAT and its potential impact on their businesses.
A collaborative initiative between The Grand Bahama Port Authority, Limited (GBPA), its Invest Grand Bahama Small Business Bureau (IGBSBB) and the Grand Bahama Chamber of Commerce (GBCC), announced last week, will help Grand Bahama businesses breathe a little easier. The "VAT & Small Businesses" symposium will shed light on common VAT myths as it relates to micro, small and medium-sized enterprises (MSME) in particular.
"Businesses need more information," stated Deann Seymour, chief financial officer for the GBPA Group. "We are finding that a large percentage of our licensees, which are MSMEs have very little knowledge of VAT. Some have registered, most have not, and even more are misguided by incorrect public opinions rather than factual information," Seymour expressed.
Adding that businesses really must pay attention, Seymour said that information is essential. "It is important that business owners understand VAT guidelines and policies relative to their business sector and structure," she noted. "GBPA is excited to partner with the GB Chamber on this initiative, to bring clear, concise and factual VAT information to our licensees and business owners throughout Grand Bahama."
Newly-elected GBCC Director Charles Pratt emphasized the importance of businesses understanding the dynamics of VAT.
"There are some common misconceptions out there which the "VAT & Small Businesses" symposium will address. Topics include: Registering versus not registering for VAT; How has VAT changed my business sector, i.e. (competition, inventory or service pricing, etc.) and so on," Pratt advised.
Considering that VAT is a topic that will be discussed for months to come, Pratt noted that the GBCC has plans to extend the small business training to outlying settlements in the east and west of the island as the year progresses.
Slated for Thursday, January 22, the "VAT & Small Businesses" symposium will offer a morning and evening session, beginning at 9:30 a.m. and again at 5:30 p.m.
Businesses are encouraged by both GBPA and the Chamber to take advantage of VAT information seminars as they are made available. "The more information you have, the better prepared you can be," Seymour commented. "For MSMEs especially...VAT will change the way you conduct business. Understanding it will help you to effectively manage these changes," she concluded.

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New GBI consultancy firm

January 21, 2015

FREEPORT, Grand Bahama - "Creating a vision to make your business successful" is the mission statement of a new consultancy firm on Grand Bahama. Remaining true to its motto, Visionary Business Consultants, Limited (VBCL), which recently began operating in downtown Freeport, is already offering much-needed assistance to business owners.
As part of its services, VBCL specializes in accounting, bookkeeping, property management, corporate, outsourcing and recruitment services. Additionally, with the introduction of value-added tax (VAT), the company is capable of serving as an official VAT representative, or liaison between businesses and the VAT Department.
According to a company spokesperson, VBCL Office Assistant Natalie Coakley, "with the implementation of VAT, it became evident that some micro, small and medium-sized enterprises were not prepared to meet the challenge as it relates to its impact on their relevant business and accountability with respect to the details of what should be captured for reporting to the VAT Department, as well as how their records should be maintained."
Therefore, VBCL wanted to do its small part by sponsoring 11 businesses to attend this week's "VAT & Small Business Seminar", slated to be held at The Grand Bahama Chamber of Commerce on Thursday, January 22.
"On the whole, when a new policy is adopted, there will be the usual fears and misconceptions," Coakley added. "These seminars will hopefully bring light and clarity to those misconceptions and place the attendees in a perfect setting to glean the correct and appropriate knowledge in addition to gathering amongst other attendees who are experiencing the same challenges where they can feed from each other."
While presenting the complimentary seminar registrations to the appreciative recipients, Coakley encouraged other members of the business community to take part in the invaluable 90-minute sessions scheduled for 9:30 am and 5:30 pm at The Chamber of Commerce, to transform their mind set and chart their course forward.
"We encourage persons to register for such events and also to contact us with their VAT enquiries," she said. Some businesses are confused as to whether they should be maintaining a separate bank account to hold the taxes collected on behalf of the government amidst learning a brand new point-of-sale system that may have been implemented because it was recommended that this was required to account for these transactions. Visionary Business Consultants, Limited can provide the necessary consultation required to ease those fears as to whether or not a separate bank account should be maintained, how records should be kept for future possible audits by the VAT Department and the oversight of business processes to ensure complete compliance.
Along with providing assistance for business owners, prospective employees are also encouraged to take advantage of VBCL's services as the company is actively engaged in building a complete database of applicants interested in registering for future full-time or part-time employment. The database will be available to potential employers who are seeking to fill various positions.

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Multilaterals foresee positive growth for region

January 21, 2015

Economic growth for the Latin America and the Caribbean region is expected to reach 1.7 percent in 2015 despite growing regional concerns over commodity prices and tightening liquidity conditions, according to a recent World Bank Report.
In its Global Economic Prospects report issued last week, the World Bank stated that rising tourism receipts were expected to support the region while net capital flows to the region were expected to rise slowly, despite tightening global financial conditions
"Regional growth is expected to strengthen to 1.7 percent in 2015, rising to 2.9 percent in 2016 and 3.3 percent in 2017, on strengthening exports and investment. The recovery in advanced countries is expected to support external demand growth offsetting the impact of China's adjustment to a more sustainable long-term growth.
"Tightening global liquidity conditions following the expected interest rate hikes in the United States could trigger sharp swings in capital flows and large asset price and exchange rate movements. Given a continued strong U.S. dollar, capital flows to the region could stall or reverse, choking off financing for consumer durables and investment, and weighing on growth," read the report.
Growth in Latin America and the Caribbean declined to 0.8 percent in 2014 due to "declining commodity prices, a slowdown in major trading partners, and domestic challenges in some of the region's major economies." The report noted that regional growth for the past year was less than a third of the recorded growth in 2013, making it the slowest in over 13 years, with the notable exception of 2009.
The report also outlined regional risks for the year, stating that the balance of risks in Latin American and the Caribbean leaned heavily towards the downside, as it did in most regions. The World Bank warned that worsening economic slowdown in the region's largest economies, Argentina, Venezuela, and Brazil, could spread throughout the region. However, it added that these domestic constraints are largely expected to loosen in the medium term.
Perhaps more prudent to The Bahamas investment outlook for the year, the World Bank indicated that a sharper-than-expected slowdown in China combined with a steeper decline in commodity prices represented major downward risks for the region's outlook in 2015.
The report follows the International Monetary Fund's (IMF) decision to cut its global economic growth forecast for 2015 and 2016 by 0.3 percentage points down to 3.5 percent and 3.7 percent, respectively.

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Gas Price ARE VAT INCLUSIVE
Gas Price ARE VAT INCLUSIVE

January 21, 2015

It has been brought to the attention of the VAT Department that certain gas stations are charging VAT in addition to the value displayed at the pumps...

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Strike Injunction extended until February 11, 2015

January 21, 2015

We’re pleased that the Court has extended the injunction until February 11, 2015 that bars the union from calling a strike or industrial action...

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BTC 2015 Directories Celebrate Inaugural Junkanoo Carnival
BTC 2015 Directories Celebrate Inaugural Junkanoo Carnival

January 20, 2015

The Bahamas Telecommunications Company 2015 Directories are now available at BTC locations and Post Offices nationwide. The colourful covers on both white and yellow pages for Nassau, Grand Bahama and Abaco...

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RBC Gives to Read Bahamas

January 20, 2015

Minister of Education, Science and Technology the Hon. Jerome Fitzgerald, pictured second left, addressed RBC executives from Canada who made a cruise stopover visit on Thursday, January 15...

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Abaco Cay Realty launches New Website, hits $100 Million in Listings

January 20, 2015

A prominent real estate firm in Abaco announced this week it has hit $100 million in listings with properties ranging from a modest Marsh Harbour home to an historic Hope Town cottage...

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CIBC FirstCaribbean continues to demonstrate Commitment to Region
CIBC FirstCaribbean continues to demonstrate Commitment to Region

January 20, 2015

Bank expands Retail Banking services...

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BORCO Supports Bahamian Culture

January 20, 2015

Buckeye Bahamas (BORCO) helped the Junkanoo route in Grand Bahama sparkle just a little bit brighter this Junkanoo season with their continued support of the Superstar Rockers...

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BPC: Shortsighted not to drill

January 19, 2015

Oil exploration for The Bahamas, according to Bahamas Petroleum Company (BPC) CEO Simon Potter, is not only about energy, it is about export, diversification and cash generation, since the prospects that exist suggest that successful exploration will yield "significantly more oil than The Bahamas can use."
Potter spoke with Guardian Business about how the sharp fall in oil prices on the open market (now trading at below $50 per barrel) affects the prospects for BPC drilling an exploratory well in The Bahamas. In his view, it is very shortsighted to suggest that The Bahamas should not drill for oil because of the low price of oil on the open market at present, especially given the fact that practically 100 percent of the infrastructure for energy capacity is tied to fossil fuels.
"We've been here before, in 1986, 1999, 2008 and again now in 2014/2015. It is a cyclical pricing business and therefore most oil companies take a much longer-term view about these fluctuations in pricing," Potter said.
BPC holds five licenses for offshore oil exploration in The Bahamas - Bain, Cooper, Donaldson, Eneas and Miami - each covering an area of more than 3,000 square kilometers. The licenses grant BPC the sole right to undertake exploration in licence areas subject to conditions set out in the licences and Bahamian legislation and regulations.
The company has an obligation to commence drilling of a first exploration well by April 2015, with a further requirement to commence a second exploration well by April 2017.
The BPC CEO also discussed what he termed "the declining asset base".
"As soon as you produce oil then you've got a declining asset base and the only way that you can replace that declining asset base is through exploration and indeed successful exploration. So, in order not to perpetually get smaller, oil companies must explore," he said.
Having spent nearly $90 million up to this point, BPC is on the market for a partner to fund the building of the exploratory well, a project Potter said could cost about $50-$60 million. He admitted that the company's search for a partner to fund the drilling project is "subject to sentiment".
"Certainly in the short term, sentiment is difficult. People's view is colored by the current price, notwithstanding the mature view about the longer term oil price," he said.
"...Most people want to be able to demonstrate capital efficiency at a time of low oil price, so the emphasis moves to oil production and cost and of course, failed exploration is a cost. It's only successful exploration that actually pays off," Potter noted.
So, the oil executive said that when it came to BPC's prospects, the sentiment in the immediate short term is focused on capital efficiency offset by a longer term view of what the oil price will be in the five to seven years time when the project matures.
"Obviously, you want to differentiate your project to be a good project and in the context of The Bahamas, certainly we look to differentiate our project as a good project on the basis of scale. The prospects that we have are, comparatively speaking, huge," he said.
"We are a good project on the cost base, how much it would cost you to develop this resource, and of course we're in a beneficial location from that point of view, given that we're close to infrastructure, close to contractors, close to service providers, which looks to mitigate cost.
"And equally, we're in a beneficial location given the fact that we're in a mature democracy with a well-founded judicial and legal system and financial system, so in terms of risk, the risks of operating in this location are relatively low," he added.

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Yuan hub status presents trade, investment opportunities

January 19, 2015

The announcement that The Bahamas will trade in Chinese currency ensures opportunities for trade and trade financing, encourages more trade relationships and exports given the ability to settle in renminbi, and creates the potential for Bahamian institutions to invest directly in yuan-denominated bonds and securities without the downside of conversion, according to Bahamas Financial Services Board (BFSB) CEO Aliya Allen.
The announcement also means the jurisdiction is much closer to being a gateway between South America and Asia, utilizing its depth of expertise in financial services to facilitate trading relationships and trade finance, she said.
Reacting to the news in a piece for the BFSB's newsletter, Allen said, "Chinese investors and institutions are likely to view The Bahamas as a much bigger financial player.
"And the international and global banks that want to access Chinese clients wishing to transact in their own currency will undoubtedly recognize that being 30 minutes from Florida, in a time zone the same as New York with access to both Latin America and Asia facilitated by the renminbi hub, is a very attractive proposition," she added.
On January 7, Prime Minister Perry Christie announced an agreement with the Chinese president that would allow The Bahamas to trade in Chinese-denominated currency, the renminbi (RMB). The yuan is the basic unit of the renminbi. As a result of the internationalization of the renminbi, it is estimated to be the world's 8th most traded currency.
Allen said that for The Bahamas to become only the second recognized hub for renminbi trading and settlement in the Americas is an acknowledgement of the strength of the diplomatic relationship and friendship that exists between The Bahamas and Chinese governments, and also the confidence of the Chinese in The Bahamas' financial infrastructure that has been refined and developed over the course of 80-plus years.
The arrangement serves as "a glowing endorsement of The Bahamas' financial infrastructure for settlement and clearing and supports the jurisdiction's capacity and burnishes our reputation as a major financial center," noted Allen.

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Johnson: IAAF relays 23 million spinoff

January 19, 2015

Minister of Youth, Sports, and Culture Dr. Daniel Johnson yesterday said he anticipated a greater economic impact from this year's International Association of Athletics Federations (IAAF) World Relays event, after a recent impact study conducted by a Canadian sports organization revealed that the 2014 relays generated an economic impact of $23 million, just over twice the government's investment in the Thomas A. Robinson National Stadium.
Johnson told Guardian Business the results of the impact study had given the government the confidence to negotiate another two-year agreement with the IAAF in Monaco, with the opportunity to bid for an even longer 10-year hosting contract once the current agreement expires.
"Last year we really did very well. Our economic impact from this event was more than twice what we put into it. This year we're expecting to be better than we did last year. We think we're going to fill more seats in the stadium, we think we're going to have more people purchasing tickets earlier and ticket prices are also going to be slightly up this year," said Johnson.
He added that the stadium would require no major renovations ahead of the 2015 relays aside from cosmetic maintenance. Although Johnson is pleased with the relays' financial performance last year, he said there is significant untapped revenue potential in marketing and merchandizing, while noting that this year's relays would incorporate more cultural events.
"We didn't fully capitalize on some marketing and merchandizing that we could've done. We're going to do some work in the next couple of days to improve on our merchandizing," he said.
Although Johnson had previously stated that the event had generated three times the initial investment in total economic spinoff, he said yesterday that an impact study conducted by a sports agency affiliated with the Canadian government revealed a total spinoff of $23 million on top of an $11 million investment in the stadium.
"We want to be very sure that these large scale events that we're doing get the desired result. Part of it is promotion for tourism and bringing Bahamians together, but we also have to be responsible in our spending to make sure that it pays for itself while ensuring that the impact is widespread and significant enough for us to then lock ourselves in to doing this on a long-term basis," he said.
The 2015 IAAF World Relays is part of the ministry's strategy to boost the country's sports tourism profile through partnerships with international sporting organizations. The government last month announced that Albany would host the 2015 Tiger Woods Hero World Challenge golf tournament, while the Thomas A. Robinson National Stadium recently hosted the inaugural Bahamas Bowl college football game.

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Okyanos expands beyond cardiac stem cell therapy

January 19, 2015

The Okyanos Heart Institute, the Grand Bahama-based stem cell therapy facility, yesterday announced that it had expanded its treatment options beyond cardiac stem cell therapy as The Bahamas positions itself as a regional leader in stem cell therapy. Speaking with Guardian Business, Okyanos CEO Matt Feshbach revealed that the government had approved Okyanos to perform a wider array of procedures, treating autoimmune, orthopedic and rheumatoid arthritis-related ailments, following inspections.
"We had originally chosen to focus on cardiac cell therapy, but as the regulations were developed and the science and technology that we're working with has progressed it became very clear that these cells that we use from a person's own body fat can treat a number of conditions," said Feshbach.
The $10 million facility currently employs roughly 30 Bahamians and has treated over 40 patients from over half a dozen countries since it began offering cardiac cell therapy in October.
"We've had extremely high patient satisfaction and remarkable outcomes. We're now treating about one patient a day and we expect to increase the numbers
sequentially every month throughout the year. We also expect to hire more staff and further invest in leading edge technology to ensure that we have the highest standard of safety and care for our patients," Feshbach said.
Last year the government passed the regulations for the Stem Cell Research and Therapy Act 2013, which allows for embryonic stem cell therapy only in "exceptional circumstances", stipulating that all embryonic stem cells intended for therapy must be previously derived, and prohibiting the use of new human embryonic cells.
The regulations led to the creation of the National Stem Cell Ethics Committee, the Scientific Committee and the Compliance Committee to oversee the growing industry. Initial application fees for stem cell research stood at $2,500 in the tabled regulations. Approved facilities would be required to pay an annual license fee ranging from $15,000 to $50,000.
Feshbach applauded the government's approach to stem cell therapy, arguing that The Bahamas had an appropriately rigorous regulatory framework that both protected patients and ensured that the country is at the forefront of the stem cell industry. In addition, Feshbach welcomed competition as the fledgling field grows in 2015.
"We feel that The Bahamas is the ideal place for legitimate stem cell research and therapy to take place. We welcome other providers that are compliant because it will lift the whole field," he said.

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Turnquest: Continued challenges in financial services

January 19, 2015

The Bahamas' financial services sector will continue to face significant challenges in 2015 amid tightening international tax regulations and increased competition from other offshore financial centers, according to Free National Movement (FNM) Deputy Leader Peter Turnquest.
Speaking with NB12, Turnquest said there is reason for the country to remain concerned about the continued threats to its offshore financial services industry, but he expressed optimism in the country's flexibility. He similarly stressed the need for improved human capital moving forward.
"As an industry, there is no doubt that we continue to have challenges. We're going to find more and more threats to the industry. Be that as it may, I believe that we have a wealth of talent in the country, though it does need to be supplemented by experts in niche markets.
"I believe that we have the skills available but we need to supplement and train to ensure that we are always at the cutting edge and able to meet whatever competition is out there," he said.
Turnquest, an accountant by trade and shadow minister for finance, felt that fund management continued to be viable, while suggesting that The Bahamas could expand its offerings though arbitration. Although many have touted arbitration as a key area for growth in the sector, Bahamas Institute of Financial Services President Dorcas Cox recently told Guardian Business that the country needed to keep its expectations in check regarding arbitration.
"Over the last couple of years we've developed a unique set of products and we need to continue to find specialized areas that we can exploit, including arbitration in commercial matters," he said.
Speaking broadly on the direction of the country's financial services industry in 2015, Turnquest touched on the recent appointment of Hope Strachan as the Minister of Financial Services, calling the government's decision "puzzling."
"It is somewhat puzzling why she would have been the one to be advanced given her lack of experience in the area of financial services. It obviously shows the lack of depth in the government when it comes to these matters. I felt it would have been more appropriate to reappoint someone like the current Attorney General, who has held that portfolio before," he said.

Strachan, who replaced Ryan Pinder, has defended the appointment, stating that she was committed to further shaping the country into a financial hub. She previously served as the Minister of State for Transport and Aviation.

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Macau resort to feature Ferris wheel

January 19, 2015

As hospitality professionals await the opening of the $3.5 billion Baha Mar megaresort, those with a penchant for spectacle will find this news from Macau interesting: Developers plan a $2.1 billion casino resort built to mimic Batman's Gotham City, with at least one eye-catching feature.
The property - to be known as Studio City - will feature a Ferris wheel built into the hotel wall, inspired by the idea of "asteroids shooting through a Gotham City building".
According to industry reports, in addition to the "Golden Eye" - as the 130-meter Ferris wheel ride will be called - the resort will feature a multi-purpose entertainment center for live concerts, theatrical and top sporting events, its own TV studio and a 30,000-square-foot mall.
Studio 8, a fully-operational TV broadcast studio, will be a 300-seat live-audience arena for reality and game-show productions for Asia.
Developers behind Studio City plan to include a virtual reality Batman ride and Wonder Woman go-karts.
The $2.1 billion hotel will have 1,600 rooms, each designed in Art Deco style, and a Pacha nightclub will take up residence in Studio City. The Pacha brand already has clubs in Ibiza, New York, Dubai, Buenos Aires and Sydney.
Studio City is set to be built this year.

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FATCA may have unintended consequences

January 19, 2015

The Bahamas has signed a Model 1B intergovernmental agreement (IGA) with the U.S. about the Foreign Account Tax Compliance Act (FATCA), and continues to make itself ready for a new global tax transparency regime, but at least one observer has suggested that the FATCA regime may have what he called "unintended consequences for financial systems."
FATCA was enacted in 2010 to target non-compliance by U.S. taxpayers using foreign accounts.
The law requires banks outside the U.S. to provide information to its Internal Revenue Service (IRS) on any customer deemed a "U.S. person" if they have an account with more than US$50,000. It aims to crack down on tax dodgers who hide hundreds of millions of U.S. dollars in offshore accounts annually in an effort to avoid paying Washington its due, and on the penalty side, FATCA requires U.S. financial institutions to withhold 30 percent of certain payments made to foreign financial institutions that do not agree to identify and report information on U.S. account holders.
While The Bahamas and other countries in the region have indeed signed IGAs with the U.S. to "comply" with FATCA, as recently as April 2014 the region - through the forum of the Third Caribbean Conference on the International Financial Services Sector in Nassau - expressed concerns that the U.S. was not playing fair in the FATCA negotiations.
Now that the law has had time to build momentum, a number of observers are identifying unintended consequences.
Peter Guy, a former international banker who writes for the South China Morning Post, wrote recently that many financial institutions are still completely confused and unable to comply with the FATCA regime. Guy wrote that while the law sounds like another innocuous tax regulation, "it represents the most ambitious tax and personal data collection strategy in financial history."
According to him, FATCA will embolden and encourage "global intrusions by US government agencies...More people will be driven underground to seek shadow banking services."
"FATCA is controversial because it dramatically shifts the burden of disclosure from the American person to their banks," Guy pointed out. "Foreign financial institutions are now more than just tax bounty hunters for the U.S. Internal Revenue Service (IRS), but pawns in an historical power play for control over the global financial system."
Guy said the unintended effects of FATCA are already evident, especially in Asia where so-called shadow banking is - in his words - "a growth industry."
For instance, he said an American gambler had described to him how he stashes his poker earnings at a Macau casino to avoid FATCA's reach into banks. And Guy reported on a scheme in which clients deposit their yuan (Chinese currency) in a specific onshore, mainland bank account and, for a 22 percent commission, the service will exchange and deliver the US dollar equivalent of physical cash in a suitcase anywhere in Vancouver or New York.
"American residents in Asia seeking to hide assets only have to find a strictly local Asian bank with no links to the U.S. banking system," Guy said.
Guy argued that FATCA extends U.S. taxing authority far beyond legally requiring expatriate Americans to file accurate tax returns.
He cited Dan Mitchell, senior fellow at the Cato Institute, who said FATCA is expected to yield only US$870 million a year.
"This is a miniscule amount compared to the amounts being spent to implement this law, by the US government and up to 100,000 other institutions who didn't ask to be part of this."
Guy's point here resonates with the findings of a global survey conducted by Democrats Abroad (DA), the overseas arm of the Democratic Party. That study highlighted growing concerns about taxation and financial reporting facing Americans living outside the U.S., and in particular the consequences of FATCA.
The organization confirmed that it had been working to alleviate the "unintended consequences of FATCA." While noting that the Act "was enacted to stop Americans living in the US from hiding money from the taxman in overseas accounts," DA said "it has meant that one in six citizens who responded to the survey have had their financial accounts closed because their foreign FIs did not want to incur the cost of annual reporting on American customers' accounts to the US Internal Revenue Service."
The group argued that its study - the results of which were released in September 2014 - showed the "intense impact FATCA is having on overseas Americans."
"Their financial accounts are being closed, their relationships with their non-American spouses are under strain (21 percent reporting that they either no longer have joint accounts or are thinking of moving to separate accounts), some Americans are being denied promotion or partnership in business because of FATCA reporting requirements, and some are planning or contemplating renouncing their U.S. citizenship," DA said.
The latest survey was carried out in June and July 2014 to examine experiences related to FATCA. There were 6,552 responses from Americans hailing from all 50 states and the District of Columbia, who are now living outside the US in locations across six continents.
Chair of DA's FATCA Task Force, Carmelan Polce (Democrats Abroad in Singapore), said the results of the survey show that Americans, no matter where they live, support policies that fight tax evasion. At its meetings in Washington, DA stressed that it has always insisted that "most Americans living abroad are ordinary citizens living middle class lives after moving abroad for employment, a relationship or retirement, and are not the intended target of the FATCA legislation."
Kathryn Solon (Democrats Abroad in Germany), DA's international chair, said, "We believe that the unintended consequences of FATCA raised by this survey - an unfair burden for Americans abroad - can be relieved without undermining the enforcement power of the law."
And The Economist, a highly respected financial publication, suggested in a recent article on the law that while going after tax dodgers is understandable, FATCA is overkill, "a piece of extraterritoriality stunning even by Washington's standards."
As others have noted, the costs of complying with FATCA are likely to dwarf the extra revenue it raises. In addition, another "unfortunate" unintended consequence cited by Economist is the reaction to Americans living abroad, many of whom have been rejected by foreign providers of banking services, insurance and mortgages because, given the amount of paperwork needed to satisfy "Uncle Sam," American clients are simply too much hassle.
Even more, American citizens are not the only victims, The Economist says. The law's definition of a "U.S. person" includes green-card holders and "anyone with a substantial connection to the country."
"Meanwhile, the drug dealers and sophisticated tax evaders who inspired all this will switch into non-financial assets, such as art and property, or hide behind shell companies and trusts," the magazine posited. "The latter would be easier to penetrate if reliable ownership information were collected, but often it is not - and America is one of the worst laggards (see Delaware, Nevada and all the other money-laundering paradises within its borders)."
And another question raised by the FATCA implementation is the "intrusiveness" of the law, which raises serious privacy issues.

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Cox leads new BIFS executive team

January 19, 2015

At a meeting of the council of the Bahamas Institute of Financial Services (BIFS) held December 17, 2014, Dorcas Cox, training manager of Scotiabank (Bahamas) Ltd., was unanimously ratified by members of council, representing member financial institutions and industry regulators for the position of president of the institute.
Cox's appointment was also fully supported by Sean Albert, managing director of Scotiabank.
Miss Cox's appointment to this position brings to the institute a wealth of expertise with over nineteen years of progressive experience in human resource management, human resources development, organizational development and project management. In addition, she brings to the institute a robust passion for education and training.
Cox is a project management professional; certified instructional designer/developer for technical and non-technical related courses; is trained in measuring the return on investment (ROI) in training, development and performance improvement programs; is a certified training and meeting facilitator and is trained in adult learning principles.
She is also the author of three books: "Project Management Skills for Coursework - A Practical Guide to Completing BGSE Coursework", "Project Management at Work", and "Project Management Skills for Instructional Designers".
In support of this appointment, Kim Bodie, BIFS executive director, informed members that recent amendment to BIFS's articles of association make room for professionals like Cox to be appointed to serve at this level of the organization. She said it also coincides with BIFS recent strategic focus to establish a succession plan for BIFS as it celebrates forty years of providing education and training programs for member employees in the sector, and by extension those persons in the community who desire to pursue financial services as a career choice.
She said BIFS has accomplished forty years of success and through its innovative and creative energy has been successful in training a large number of employees who currently holds management and supervisory positions at all levels of the financial services sector.
Bodie looks forward to working along with Cox to further expand the skills of employees in the workforce.
As president of the institute, Cox chairs the executive team. Her expertise will provide guidance and support to the management team in decisions related to training and education designed for the industry. She will also liaise with industry stakeholders both local and international to advance the mandate of the institute and direct focused industry training initiatives
Other members appointed to serve on the executive team of BIFS for the fiscal period 2015-2016 are:
Hubert Edwards, 1st vice president and deputy managing director, strategic planning, Bank of The Bahamas; 2nd Vice President Robert Pantry, managing director, RBC FINCO; Treasurer Samuel Wilkinson, assistant manager, Votorantim Bank Limited; Assistant Treasurer Philip Ricardo King, managing director, Bahamas Law Enforcement Cooperative Credit Union; Jane Major, Chair of Education Committee, trust officer, Edmond de Rothschild (Bahamas) Ltd. and Deputy Chair of Education Cyprianna Bethel, deputy manager, human resources, The Central Bank of The Bahamas.

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