Contribution of Minister Strachan to the Automatic Exchange of Financial Account Information Bill
Nassau, Bahamas – Contribution of Seabreeze Member of Parliament and Minister of Financial Services, the Honorable CV Hope Strachan on the Automatic Exchange of Financial Accounts Information Bill, 2016
Mr. Speaker, I rise to support the following bill:
A bill providing for the implementation of the Common Standard on Reporting and Due Diligence for Financial Account Disclosure in Tax Matters and Related Purposes a second upon reading of a bill by the Member the constituency of Seabreeze and the Minister of Financial Services.
I stand on behalf of the good people of the riding of Seabreeze today in support of the bill before us today. I wish my constituents would know that I am eternally grateful for the trust they have placed in me to come to this august place to do business on their behalf.
Today is also an important day for me as Minister of Financial Services. This bill that we will be debating here today is the most critical law for the financial services industry today.
Mr. President, this is why you will see today in the gallery of this house several professionals, including Miss Tanya McCartney, CEO of the Bahamas Financial Services Board, as well as several industry professionals. These people are heavily invested in this second pillar of our economy and are passionate about ensuring its sustainability and viability. They have worked tirelessly and have devoted extremely valuable time to producing this bill that is before us today. I would like to thank them publicly today for their efforts in this regard as well as for the constant support they have given to the Ministry of Financial Services over the past few years and more particularly I would like to thank them for their support during my office since January 2015.
Mr / President
I think it is fair to say that this bill is essential to the very survival of the financial services industry. This is of course not the most compelling subject for many of our people who are still recovering from the devastating effects of Hurricanes Matthew and Joaquin. Many of us are still trying to clean up and rebuild; a process that will likely take years, but the people of the Bahamas are resilient and have an innate ability to recover from some of the most devastating situations and I pray it is no different this time around.
While the subject of this bill may not be the most pressing issue for a large percentage of our population today, it is nonetheless essential to the well-being of the approximately 15% of our working population. the financial services industry and depend on the industry for their lives. The industry not only includes banking in the traditional sense, but also includes the insurance and real estate industries in the Bahamas. This also applies to our middle class, as the industry is largely responsible for creating and sustaining this segment of our population.
This, THE AUTOMATIC FINANCIAL ACCOUNT INFORMATION EXCHANGE ACT, 2016 is the next most important law we seek to enact since the Foreign Account Tax Compliance Act (FATCA) which put into effect an intergovernmental agreement for the automatic tax exchange. information between the Commonwealth of the Bahamas and the United States of America. The United States has asked us to automatically exchange tax information about its citizens and financial transactions here in this country and we now seek to fulfill the same obligation to our global counterparts who are members of the Organization for Cooperation and Development. (OECD). Our imperative on the part of the OECD includes the automatic exchange of information according to a new global standard or a common reporting standard (CRS) rather than on request, which is of course the existing standard for the Bahamas.
The Bahamas is a well established, well regulated and fully compliant jurisdiction and we intend to remain so. We take seriously our commitment to the OECD and our global partners to exchange information by 2018 and have chosen to do so on a bilateral basis. There is a lot of work to be done to meet the 2018 deadline and to execute, navigate and negotiate using the bilateral approach that we have taken. The bilateral approach as opposed to the multilateral approach was determined after much research, careful consideration and consultations. It was prioritized as the best approach for our existing tax structure, providing the best opportunity to review each jurisdiction against their data protection mechanisms for client safety. We recognize that the time for secrecy is over. We also recognize that the world is now demanding transparency. We recognize that citizens who keep their money abroad still have an obligation to pay their fair share of taxes in their home country. But we also recognize the dangers inherent in the dissemination of personal information, especially for wealthy individuals. We are committed to transparency and accountability and to the standards demanded of us by US and European regulators. However, we fully recognize our responsibility to our customers to maintain the highest degree of confidentiality for their security and integrity.
Bahamas Automatic Financial Account Information Exchange Bill 2016 Marks Significant Step Towards Bahamas Commitment to Implement Global Automatic Exchange of Information (“AEOI”) for Tax Purposes in 2018. This initiative introduced by the Organization for Cooperation and Development (“OECD”) was developed in response to the request of the G20 and approved by the OECD Council on July 15, 2014. It calls on jurisdictions to obtain information from their financial institutions and automatically exchange this information with other jurisdictions on an annual basis. . It defines the information relating to the financial accounts to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as the common due diligence procedures to be followed by financial institutions.
The standard consists of the following four key parts:
A competent authority agreement (CAA) template, providing the international legal framework for the automatic exchange of CRS information;
the common reporting standard;
Comments on CAA and CRS; and
CRS XML Schema User Guide to Help Users
There are currently over 100 countries that have committed to its implementation, and as of October 2016, and with almost a year left before the first trade date of September 30, 2017, there are now already over 1000 bilateral exchange relationships activated with regard to jurisdictions that have committed to respecting a 2017 deadline.
Mr Chairman, in view of 2018, an Implementation Working Group has been selected, consisting of all key stakeholders, including the Ministry of Finance as the portfolio ministry, the Ministry of Financial Services as the coordinating department, Attorney General’s Office, Bahamas Financial Services Council and other industry representatives. This working group has been working diligently over the past few months to ensure that we have a clear path towards the implementation of CRS in 2018 with the participation of all relevant sectors of the industry. This working group developed an implementation plan and assisted in the development and introduction of the draft AEOI legislation which is currently being presented.
The bill aims to:
a) give effect to the Common Reporting Standard;
b) give the Competent Authority the necessary powers to enter into agreements with the government of another country for the automatic exchange of financial account information in tax matters;
c) ensure the proper administration and application of the bill; and
(d) ensure the fulfillment of the obligations of The Bahamas in an agreement entered into under the Bill.
In order for the working group’s work to continue and the Bahamas to meet the CRS’s 2018 implementation deadline for Automatic Exchange of Information, the Automatic Exchange of Information on Personal Information Bill 2016 financial accounts, we implore your full cooperation to accept and pass this bill unanimously today. It is imperative if we are to show the international community as a whole as well as the many financial institutions and intermediaries that have invested in the Bahamas that we are serious and committed to upholding the AEOI initiative. With this in mind, lists with which we will engage in priority have been created and invitations have already been issued to many of them to start negotiations. The list will be available shortly. Under all circumstances, therefore, I invite my colleagues here, including those opposite, to consider both sides of the island to put aside political differences and do what is best for our industry and our people. .
Mr President, our task will not be easy because we have to enter into bilateral negotiations with all the countries with which we will sign automatic exchange of information agreements. This can only happen if legislation is passed to legally effect CRS implementation before the end of the year. Our work on this initiative is essential to the survival of the sector and its importance as the second pillar of our economy. The government is committed to ensuring that all the resources necessary to ensure its success are available and my department is committed to working until it is completed.
I am confident that, like the work we have done for FATCA which has brought us so far, we can and will meet our global obligations in 2018.
We have a cadre of experienced and educated professionals who have distinguished themselves locally, internationally and globally. The Bahamas have products that have stood the test of time. Our foundations, trusts, smart funds and now icon demonstrate that we have been creative, innovative and responsive in an increasingly competitive environment. We overcame the blacklist of the late 1990s and early 2000s. We continually evolve as our legislative agenda aligns with our international and global regulatory obligations. We are a sovereign jurisdiction and this has allowed us to be nimble and flexible in the face of the ever-changing dynamics of this extremely volatile industry. We have persevered, but there is still a lot of work to do. The presentation of this legislation today once again demonstrates one of the fundamental philosophies of my ministry as a coordinating ministry – that is, to do whatever is necessary to ensure the Bahamas’ full compliance with established international norms and standards and thus ensure that we remain in a position of strength, as leaders in the region, and strong competitors on a global scale.
Our mission: a stronger Department of Financial Services, a stronger financial services industry; and finally stronger Bahamas.
Seabreeze fully supports this bill.