Bahamas standing firm on bank secrecy laws

Prime Minister and Minister of Finance Hubert Ingraham.

NASSAU, Bahamas, October 1, 2009 – Don’t expect international pressure on so-called tax havens to scare the Bahamas into changing its offshore bank secrecy laws. Prime Minister Hubert Ingraham says that’s where the country draws the line, even though it does intend to comply with international tax regulators.

Speaking to the Reuters news agency in Miami, where he was attending a conference on the Americas, Ingraham said banking secrecy was one of the pillars of his country’s 50-year-old financial services sector and there’s no plan to change them.

The Bahamas is currently on a grey list of jurisdictions which, according to a list drawn up by the Organisation for Economic Cooperation and Development (OECD), are not fully compliant with internationally agreed tax standards.

The OECD requires countries to sign 12 Tax Information Exchange Agreements (TIEAs) in order to be placed on the white list and Ingraham said the intention was to have that done by the end of the year. The Bahamas already has a TIEA with the United States, signed in 2002, and just two weeks ago concluded another with Monaco.

But Ingraham said the country would not just throw open the doors of its offshore financial sector.

"If there are specific things that are needed from a particular person because of a particular set of circumstances, then yes, the Bahamas will cooperate. But we are not in the business of allowing 'fishing' to take place in the Bahamas," Ingraham told Reuters.

"Just coming and throwing a big net and saying 'I want to find out this and the other' is ruled out.”

Bahamas has already been affected by not meeting the internationally accepted tax standard. Earlier this week, French bank BNP Pariba announced that it was pulling out of the Bahamas and other countries on that basis.

Ingraham said there was no warning given ahead of the Monday announcement, but expressed the hope that other institutions would not follow that lead.

"We don't expect this is going to start a trend," he said.

BNP Paribas’ announcement came just days after leaders of the G20 nations vowed to keep up the pressure on tax havens to improve transparency and exchange tax information.

The Bahamas’ junior Finance Minister Zhivargo Liang called the bank’s plan to withdraw “regrettable”.