The Bahamas – What makes it attractive as an offshore financial jurisdiction

The Commonwealth of the Bahamas is located in the West Indies, southeast of the US state of Florida, and is made up of more than 700 islands. The young country, having gained independence from the United Kingdom in 1973, is one of the richest countries in the Americas, just behind Americas and Canada, and gained its current status through international banking, investment management, and tourism which contributes to the majority of its Gross Domestic Product (GDP).

Working with the Caribbean Financial Action Task Force (CFATF) which is part of the Financial Action Task Force and the International Monetary Fund (IMF), The Bahamas is trying to shed its reputation as a tax haven. However, it still offers a framework for zero income tax, no capital gains tax, gift tax, or inheritance tax which makes it an attractive location for asset protection, privacy, and estate planning. This means incorporating international business companies (IBCs) or regulated financial firms may be beneficial to both individuals and entities wishing to have a presence in multiple jurisdictions.

Why would one be interested in The Bahamas?

The Bahamas has always aimed to provide financial services in a regulated environment adhering to the ever-changing international standards. It has provided global financial services for 80 years with a focus on stability and implementation of forward-thinking policies. It is often mentioned in the same breath amongst other International Financial Centres (IFCs) like Hong Kong, Singapore, Switzerland, Dubai, and the United States. The number of reputable financial institutions that have Bahamian presence backs its status in the international circles, with seven out of the top eight private banks and thirty-five out of the top one hundred global banks making The Bahamas home.

Through the Covid-19, the forward-thinking Bahamian Central Bank has tested and developed Sand Dollar, a sovereign digital currency aimed at making digital payments easier for its residents spread amongst her islands. This puts the Bahamas ahead of many world superpowers in adopting digital currencies. Continuing with the topic of digital currencies, the adaptation of estate planning to include cryptocurrencies is also available in the Bahamas for cryptocurrency investors which bridge the gap between traditional estate planning and the current world trends.

All these points can be taken as evidence that planting a flag in this jurisdiction that keeps itself relevant should be a main consideration for global astute investors.

A clear choice for IBCs, FX dealer brokers, and fund setups?

If one is interested in setting up a fund or a broker-dealer, there are already over 120 broker-dealers, investment advisory firms, licensed to provide regulated services and an additional 700 plus funds with assets under management exceeding $600 billion, assuring one that the industry is matured and chosen by many.

For interests in IBCs, besides having no direct tax, there is no requirement for any minimum paid-up capital, just a director and one shareholder, both can be foreigners and non-resident of the Bahamas. This makes the incorporation straightforward and quick. Any compliance documentation should be provided in English as this is the official and spoken language.

There are reputable Foreign Exchange (FX) and Contracts for Difference (CFD) broker-dealers that have chosen The Bahamas as its second home as part of their global operations and remain committed to staying and building the business despite new implementations being introduced by the Securities Commission of the Bahamas. With the Capital requirement for a market making entity obtaining authorisation with the Securities Commission, to provide FX and CFDs at $300,000, it remains low compared to Europe or the United Kingdom. One has to consider that an equivalent licence in Belize will require a minimum capitalisation of $500,000 and Belize may be considered a less mature jurisdiction for regulated financial services. As with all reputable jurisdictions, substance and local personnel is a requirement for broker-dealers adding credibility to the regulatory oversight regime in place. The broker-dealers are also allowed to provide margins of up to 200:1 and higher if the client is categorised properly, which is a policy that is pro-business.

In conclusion, if one is seeking a new jurisdiction for an FX, CFD broker-dealer authorisation, Bahamas seems to tick all the boxes for businesses serious in building a reputable brand. The regulatory regime’s policies support businesses with the correct intentions and deter others with unsavoury intentions by setting the bar for capitalisation at a palatable level. As most regulators state, setting the correct policies will attract a target audience that a jurisdiction wishes. In this case, this strikes a right balance, without any other similarly reputable offshore jurisdiction that will welcome broker-dealers and allow for similar trading margins for FX and CFDs. The Bahamas may be considered as one of the best offshore jurisdictions for the FX broker-dealer industry especially after many jurisdictions have tightened rules.

Process of setting up vs Mergers and acquisitions for regulated firms.

Given that Covid-19 is still raging across the world at the point of writing, the expected setup time for getting a firm authorised in the Bahamas will be expected to increase from 2-3 months up to 6 months. This time consideration does not include the preparation time of finding a local qualified Bahamian CEO, director, and compliance officer, drafting up business plans and policies, incorporation of the entity, and other preparation work. This could mean that the time taken from the start of preparation to obtaining a license may take between 9 months and a year. In comparison, these timelines could be similar in the United Kingdom or in Europe depending on how the regulatory bodies are impacted by COVID disruptions.

Entities may consider looking at Mergers and Acquisitions as an option to shorten the timeframe to market, this may be a pricier option but an assured way of possibly inheriting a local team that can hit the ground running. Desfran is well placed to either help with setting up firms looking to attain regulatory permissions in the Bahamas or introducing an interested buyer to current firms open for mergers and acquisitions.

A veteran in the offshore financial services sector

The Bahamas, as an international financial centre, will continue to innovate itself whilst joining more than 108 countries in the Organisation for Economic Co-operation and Development (OECD) in formally acceding to the multilateral convention on the mutual administrative assistance to tax matter. The Financial Services industry has a greater importance in contributing to the country as COVID ravages its tourism industry and contributes to a shrinking GDP this year. This possible shift of focus will help attract new entrants into the Bahamas and it is believed that the Bahamas will welcome the correct investors based on its policies.

Why work with a consultancy?

Consultancy services continue to be relevant, especially during the current crisis caused by the coronavirus pandemic. However, the type of financial consultancy services one receives depends on the financial consultant one engages. The most beneficial kind of financial consultancy services will be a hybrid model that combines the desirable aspects from both the human advisor and virtual financial consultants that will assist in solving the problems faced by the investors and business owners.   

To understand how your business may benefit from financial consultancy services, it is best to engage established business consultancy experts like Desfran. Spearheaded by one of the world’s leading management teams, our team of seasoned experts stationed in more than five cities across the globe, dedicated to providing regulatory compliance solutions across different jurisdictions.  

As a partner who grows with your business, Desfran provides a suite of business solutions which includes new market entry consultancy services, new market requirements like business incorporation and registration, establishing banking relationships, marketing services, and regulatory compliance, all of which can all be fulfilled through Desfran’s bespoke solutions.  We continuously stay on top of trends and movements in the financial industry to help your business grow by identifying, maximising your business potential while providing comprehensive customised solutions.

References 2020. Central America :: Bahamas, The — The World Factbook – Central Intelligence Agency. [online] Available at: <> [Accessed 29 September 2020]. 2020. Bahamas Financial Services Board. [online] Available at: <> [Accessed 29 September 2020]. 2020. [online] Available at: <> [Accessed 29 September 2020]. 2020. Bloomberg – Bahamas Plans Nationwide Rollout Of E-Currency. [online] Available at: <> [Accessed 29 September 2020]. 2020. Central Bank Bahamas – Sand Dollar. [online] Available at: <> [Accessed 29 September 2020].


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