Minister of Financial Services (Minister of Financial Services)

The Ministry of Finance, the Central Bank of The Bahamas and Securities Commission of The Bahamas are responsible for regulation whereas, here at the Ministry of Financial Services, we are really responsible for promoting the Bahamas and the financial services industry along with the creation of polices and initiatives that help grow and facilitate the ease of doing business in The Bahamas, while also acting as the representatives in international forums regarding regulatory regional and global regulatory initiatives. This year we have participated in quite a number of major events and conferences to raise our profile, particularly in jurisdictions where we may not have previously been inclined to divert our attention. Because of new regulations in Europe and the US, as well as increasing competition among international financial centres, there has been a decline in business to a certain extent, so we aimed our  focus on new and emerging markets in Latin America and Asia. We have also been to Cyprus where we continue to explore possible opportunities and synergies and London where we maintain long time business ties. The Ministry of Financial Services partners with the Bahamas Financial Services Board (BFSB) on many of these activities and I think that we have seen a degree of success particularly with our progress on making inroads in the Brazilian market to the extent that we are now looking to develop the same profile and presence in Mexico for new business as well.

In order to remain competitive in the region, we have to continue to reinvent ourselves by identifying new niche markets, creating new and innovative products while maintaining our professional service level.  The Bahamas is the most highly skilled and educated in human capital resources when it comes to financial services in the region.   One of the areas we have identified as  as having a great degree of interest is in products that relate to immigration and residency. The government of The Bahamas already has a policy in place, where if you purchase a home for $500,000 or more, we’re able to fast track your residency. We’re looking to build on that, for example, offer residency on criteria other than just the purchase of a home, so that’s something we are currently developing. It may be shaped in the form of making investments into areas that we need assistance in. I know the government is very keen on Private Public Partnerships. We have pressing issues in a number of our family islands such as education and infrastructural development, so we are looking at including investment in those areas as some sort of component. So those are some of the initiatives that we are looking at to grow the economy and also offer more employment opportunities.

Another area that we are very much focused on is international arbitration which has been an issue for 20-40 years. My focus is to get it properly established so we can become an international recognised arbitration centre. Since I have been here, we have contracted a world-renowned consultant who is assisting us with the planning and creating a roadmap for us to get it established. We have also hired a local consultant so we at the Ministry are confident that we will be able to take this to a stage where we can see the Bahamas being established as an international arbitration centre. We are engaged in dialogue with our Bar Association as we have a legal profession act, which limits foreign attorneys from coming into practise unless they’re coming in for a case matter of special circumstances. So we are looking at how we can amend that act and working with the Bar to raise awareness of how important it is to establish ourselves as an international arbitration hub. I see an opportunity for us to really diversify the services that we offer in the country and to create some new opportunities because if we continue to do the same thing that we have always been doing, we are going to get the same result so I’m really enthusiastic as it relates to international arbitration.

We are also involved in establishing a centre for excellence in financial services here in the Bahamas. This project is being funded by a grant from the European Union that is being managed by the Caribbean Development Bank. The Bahamas Institute for Financial Services (BIFS) over the last four or so decades, has been able to establish the Bahamas as an educational centre for financial services. We have a great reputation regionally but also internationally so when consideration was being given for the grant, the Bahamas was top of the list along with Barbados. So through this grant, we have been able to start the establishment of a centre. We have hired a consultant to again provide us with a roadmap as to how that can be achieved and we are pleased with how that is going. We are working with BIFS to make sure that we are on the same page as them and the curriculum that they offer. They themselves have offered an accredited certification through a United-Kingdom based institution so we know that whatever qualifications or certifications are done through BIFS, the recipients can actually use it internationally. So we have been able to see how the Bahamas can be a major player in financial services education and we are very proud of that. It’s going to take focus but we hope to see that through to fruition.

Given the Bahamas is an international financial centre, technology is no doubt a crucial part of this sector especially in terms of product innovation and promotion. To what extent do you feel that technology and e-business are being embraced and adopted by the financial services industry today, and is the Ministry doing any work to increase take up?

The need for it is recognised and I believe that it is embraced. We have on the drawing board an MOU with the Chamber of Commerce for the establishment of the trade of information, which will be a portal and platform for small and medium sized businesses in particular to compile all of their information and data. The signing of that MOU is imminent so we recognise the need for people to have the ability to network and have that information at their fingertips. In financial services, the only way to be able to stay on the cutting edge and anticipate the dynamics of global trends is to have that technology available to you. And, while we do have a solid technological infrastructure system through our telephone and cable services providers, the difficulty is for us to have the ability to actually access that technology on a daily basis  and it is also a challenge being able to actually interface between government Ministries.  The government of The Bahamas is committed to facilitating this progression to ensure we are technologically sound.

There is also another major project underway with Bahamas Customs and the Ministry of Finance in terms of their capabilities technologically, we see that as an advantage for us because again all of these issues reflect on how we are viewed overall as a financial services centre. So a client who is looking for a centre in which to do business is going to do research and find out about all of these things and how quickly it takes to form a company, what is the court system like, what do I have to do to get a business license, if I need a permit or another type of immigration certification etc. So all of these things tie in together and form the basis of how we are reflected as a jurisdiction. So we recognise the need for us to become stronger in terms of technology to be able to interface ministries and know what each one is doing to be able to tweak programs to be able improve the ease of doing business because right now I think a lot of the ministries are operating in asylum. So if you have a computer system that works you can improve all of those services. We are working on it but it’s slow progress because of budgetary and economic constraints as the government has an archipelago of 700 islands and 22 of them are in developed state.

Our financial services industry is particularly resilient. We’ve had challenges in making drastic changes to our regulations and legislation as well as dedicating resources for the successful implementation of FATCA in recent times, which was a huge and very expensive undertaking. We had to go through the process of creating our own rules and implementing a platform structure for the exchange of information and get our industry stakeholders to come together and make sure the required information is inputted into the portal. I think the process has been seamless and in recent times the IRS has indicated that it extended the 30 September deadline so it gives another window of opportunity to some of the financial institutions that may not have reported yet to do it, but I am happy to note that we are 95% compliant with our registrants.

We have been told that the private banking industry is virtually extinct now in the Bahamas. Do you agree with this and where do you see the biggest growth areas in the financial services industry?

I wouldn’t say it’s extinct. We have had some trouble with 1-2 of the big banks pulling out due to the global regulatory landscape which has forced many businesses to rethink their strategies as well as the general financial services market globally, but we still have other companies in that business and opportunities to regain what we have lost.

I would say that our staple product has been our Trust product, which is well established and has always been steady and constant and even now we are seeing growth in that area.

We are promoting the new Investment Condominium (Icon) Fund product in Latin America and we are hoping to see continual growth with that particular product and of course our SMART funds also have been pretty successful. We have seven SMART funds models and we are looking at possibly approving an eighth model. Here at the Ministry we are studying to see whether it is suitable and acceptable for our industry partners and they are actually consulting us on that. We continue to innovate with new ides and products to ensure that we remain relevant and competitive. 

In your opinion, how successful have you been in attracting HNW and UHNW individuals from other regions to the Bahamas and what are the biggest challenges that you are working to overcome?

I would say we have been pretty successful in attracting those individuals because as I say our products have stood the test of time. We’ve been successful in selling Icon in Latin America.

The challenge is working in foreign markets that speak different languages. You have to have a cadre of professionals who speak that foreign language and we have several programs in place through partnerships with various organisations that are working on that. We have partnered with the BFSB, the Ministry of Education and Rosetta Stone on a languages program. We’ve supported a project that starts this September for high school students. We want to get them at the stage where their minds are receptive to it. So we have I think 200 students in the public school system that are going to be trained to speak another language. It’s a pilot project so the focus now is on Spanish but we’re hoping to expand that into other languages such as Asian ones. We do right now have studying in China a good cadre of young, bright students and that is done through certain programs that the Chinese government has offered through special education scholarships. The government is also offering scholarships to young people to study in China. These people are nearing their time there so we will have a number of people who can speak the language and we will try to focus some of them in the direction of financial services.

We also have to try to produce products for those markets that are culturally sound because they have to be tied to a culture of people. Those who are being educated in China are going to be able to bring back all of that knowledge for us to capitalise upon to be able to build a structure for the products that we are going to be providing. So we are hoping to get more of our professionals and students involved in learning a second or third language.

On a more personal level, leadership is one of HBR’s core values. It is clearly in your genes, with your grandmother - Mary Naomie Ingraham - leading the fight that enabled Bahamian women to obtain voting rights. How would you describe your style of leadership and what is the legacy that you would like to leave?

I have a collegial style of leadership where I certainly respect and value the opinions of others. I believe that a good leader is a good listener and one who is actually able to attract bright minds and minds that are able to contribute to their decision-making process. So I certainly don’t believe it a dictatorial style of leadership but I do believe a good leader having obtained the advice of trusted persons and persons who value their ability to be able to process information to think. Educated persons who have knowledge and experience that could put that leader in a position to have an informed decision and be able to live with the consequences of that decision.

In terms of my future in politics, politics is so focused on the worst of human beings instead of the best in many instances. That’s unfortunate because a lot of bright minds are disenchanted with that and decide that they aren’t going to get involved in it. So we do ourselves a disservice sometimes and miss the opportunities to have the contributions of some people who really can contribute to the development of the country.

For me, I’m very proud of my heritage in terms of my grandmother. I think for her time she was a fighter and she must have had some real convictions to do what she did at that time. They’re some huge shoes that I have to fill. I would certainly want to know that at the end of my time that I’ve contributed in some small way to the betterment of my country and made a positive difference.

To conclude the interview, the readers of Harvard Business Review include many of the world’s most influential business and political leaders. What message would you like to send them about The Bahamas and the Ministry of Financial Services?

The Bahamas is a strong, well-regulated and compliant financial services centre. Aside from the cadre of professionals who are extremely well-experienced in financial services, we have a product that we believe is head and shoulders above our competitors. Some of the advantages that make us hold that status are our proximity to the US, our stable government, the fact we speak English, our wonderful climate, our advanced educational system which is important for people who are looking for a place to do business but also for those who are looking perhaps for a second residence, our strong health services, our variety of islands from which to choose and our environment which is conducive to change and innovation in terms of us being flexible. We are an independent jurisdiction in that we can make policy decisions and legislate in what is in our best interests and this puts us in a better position than many of our regional competitors who are still governed by their motherland or fatherland. We have been leaders in financial services in terms of keeping pace with all the global changes and the regulatory obligations, we have actually demonstrated that we can actually get the job done in terms of being able to meet those challenges head on and to successfully implement these programs and procedures and comply with global regulations. We pride ourselves on our strong regulatory regime and our commitment to meet our compliance obligations with both national and international initiatives. We’ve had positive reviews from the UNCD and we are fully compliant as far as they are concerned. In our peer reviews we have done very well over the course of the years so people who are interested in doing business here should be confident that we are going to do the right things to protect them and that we have a jurisdiction that is huge on confidentiality. We see ourselves as being able to respond to these obligations and challenges but still being a jurisdiction focused on confidentiality for our clientele because we understand the dangers involved for high-network individuals who are looking to do business offshore. We understand that there are challenges with that regarding their safety and wellbeing and I think that the policies that we have adopted in financial services make for an environment where they can be confident that we will protect their confidentiality. So we are compliant, well-regulated and strong but we are willing to make sure that their confidentiality is preserved.