SPECIAL REPORT: THE BAHAMAS
ENTER
CONTENTS
Intro • Features • Videos
From Dr Tanya McCartney of The Bahamas Financial Services Board
INTRODUCTION
With International Investment's Gary Robinson
FOREWORD
The Bahamas is the clear choice for financial services, says Valdez T Russell
FTX DIGITAL MARKETS
All the videos from this report on one page
VIDEO
Wendy Warren gives an overview of the modernising Bahamian economy
CAYSTONE SOLUTIONS
Dr Iyandra Bryan explains what tokens are and how they help raise capital
QUANTFURY TRADING
Christina Rolle explores the evolving securities and investment environment
SCB
Chris Illing looks for safe harbours in uncertain times for financial markets
ACTIVETRADES
McKINNEY, BANCROFT & HUGHES
Alexander Christie and Vanessa Hall on The Bahamas' digital currency
ICB
Carl Culmer looks at captive insurance – a Bahamas success story
GENESIS FUND SERVICES
Antoine Bastian looks at fund administration and the impact of the pandemic
HIGGS & JOHNSON
Sharmon Ingraham explains the process of creating powers of attorney
CG CAPTIVE MANAGEMENT
Guilden Gilbert discusses the typical structure of a Bahamas captive
Gary Robinson, Publisher of International Investment, revisits The Bahamas after the lockdowns and finds that development of infrastructure and regulation have not stood still
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Foreword
The unpredicted and rapid spreading of the virus around the Caribbean resulted in sudden lockdown protocols, leaving financial institutions with little time to deal with the necessary logistics to have their workers fully operational from home. At the same time, financial markets were extremely volatile and as a consequence, financial services had even more pressure to execute on this transition in order to maintain their high standards of service. However, after the initial shock, financial markets stabilised and the home office setup appeared to be quite efficient and productive for the fiscal sector. As the world slowly moves towards a “new normal”, many financial operations will most likely downsize their office spaces to improve their cost efficiency and allow more flexibility with work from home days for their employees.
s the world has endured this seemingly endless period of limbo and restricted international travel, there has been no
time to stand still for The Bahamas financial services industry.
It is an undeniably beautiful place to be locked-down in, but the endless sun, sea and sand has been a breathtaking backdrop rather than a distraction as the work undertaken during the last 12 months has seen the jurisdiction continue to cement its reputation within the international financial centre world. Being able to demonstrate resilience and innovation while dealing with increased remote working has been seemless thanks to an excellent infrastructure and has led to some interesting technological advances in both digital currencies and investment vehicles.
foreword
After two years of travel restrictions it was simply wonderful to be able to visit this stunning archipelago once again to conduct the majority of these interviews face-to-face. The interviews mostly took place on the Island of New Providence with visits to a range of offices, facilities and financial centres from Montague to Albany, from East to West in this unique financial services centre. As Dr Tanya McCartney, CEO & Executive Director, Bahamas Financial Services Board said in her excellent introductory interview video, the presence of such a rich array of financial institutions “speaks to the maturity of the industry” and the importance of financial services to The Bahamas, the country’s second largest source of income and employment behind tourism. I recall the first time I visited in 2017 being surprised by the number of physical centres and offices rather than, as may be evident in some offshore jurisdictions, brass plaques and small token offices. This was certainly not the case in The Bahamas. Now five years later the continued growth is impressive, with the whole range of international financial services on offer, including a new rise of fintech and blockchain related businesses that are beginning to flourish.
ello and welcome to the 2022 Special Report on The Bahamas, produced in conjunction with The Bahamas Financial Services Board.
Thanks to the foresight of The Bahamas regulators, the introduction of the DARE Act in 2020 has brought this business to the Bahamas and provided vital regulation to an industry that needs it. I particularly enjoyed my visit to interview Valdez Russell at the FTX campus site, where the company is building out its International training facility. Fintech and crypto assets is an area that is going to continue to grow and the way that the traditional financial services organisations are working together with the rising fintech presence can only be a positive thing for the industry and ultimately the end users. In this special report we provide a real insight to how the regulatory process works with interviews with Michele Fields, Superintendent the Bahamas Insurance Commission and Christina Rolle, Executive Director of The Securities Commission of The Bahamas Another growth area has been the rise of captive insurance and there are some excellent interviews on this subject. This sits well alongside the traditional international financial services such as legal services, family offices, investments and insurance that this jurisdiction has become well known for. All are contained within this ezine – our biggest edition yet – and the extensive features and videos within this special report and the breadth of knowledge on display is immense. Thanks to everyone at BFSB for their diligent work in bringing this extensive publication together and all the participants for their support and access to the top level decision makers. We hope you enjoy reading/viewing at your leisure. Best Regards Gary Robinson, Publisher, International Investment
The continued growth is impressive, with the whole range of international financial services on offer, including a new rise of fintech and blockchain-related businesses that are beginning to flourish.
At the height of the emergence of digital transformation, tokens have emerged allowing entrepreneurs to receive capital easily, quickly, and efficiently
A return to paradise
Tanya McCartney, CEO and Executive Director of The Bahamas Financial Services Board introduces this special report in a video message
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CEO Message
The Bahamas is the leading international financial centre in the Latin America and Caribbean region respected for its expertise in fiduciary services
CEO message
VIDEO LINKS
video links
Michele Fields, Superintendent of Insurance at the Insurance Commission of The Bahamas, talks about the captive insurance industry and what regulatory changes we can expect in the country
Antoine Bastian, Chief Executive Officer at Genesis Fund Services, explains how investment strategies have changed in recent years, and why The Bahamas is poised to address the shift
Chris Illing discusses current growth areas in The Bahamas and developments in Fintech
Wendy Warren, Managing Director of Caystone Solutions, dicusses how the natural skills of The Bahamas help the people behind the balance sheet numbers
Kevin A.C. Moree, Partner at McKinney, Bancroft & Hughes, discusses developments within The Bahamas tax regime, and the innovation and adaptability of the jurisdiction
Christina Rolle discusses the guiding principles and driving forces influencing regulation in The Bahamas and explains the importance of the new Investment Funds Act
Iyandra Bryan explains the vision of Quantfury Trading, its mission to make retail trading more cost effective, transparent and fairer, and why The Bahamas is ahead in terms of regulation
Higgs and Johnson's N. Leroy Smith expands on the firm's 'One Team philosophy' and discusses recent legal developments that affected the country's wealth management landscape
Valdez T Russell of FTX Digital Markets says "The Bahamas is the clear and compelling choice for financial services, for new and innovative ideas to be birthed and realised"
Guilden Gilbert, CEO at CG Captive Managers, discusses the typical structure of a Bahamas captive, and explains why so-called 'Mom and Pop' captives are ideally suited to setting up in the area
As part of the International Investment special report on The Bahamas we speak to Dr Tanya McCartney, DBA CAMS, CEO and Executive Director of The Bahamas Financial Services Board
Dr Tanya McCartney, Executive Director of The Bahamas Financial Services Board, highlights the amenities and features of the country that make it an ideal location for financial services
Wendy Warren, Managing Director of Caystone Solutions, discusses how the natural skills of The Bahamas help the people behind the balance sheet numbers
Higgs and Johnson Partner N. Leroy Smith expands on the firm's 'One Team philosophy' and discusses recent legal developments that affected the country's wealth management landscape
Valdez T Russell – Vice-President, Communications and Corporate Social Responsibility, FTX Digital Markets says "The Bahamas is the clear and compelling choice for financial services, for new and innovative ideas to be birthed and realised"
choice for financial services, for new and innovative ideas to be birthed and realised"
Wendy Warren of Caystone Solutions says The Bahamas has shown great resilience against the pressures facing all global financial centers, thanks to its high standards for compliance and innovation
The Bahamas: A world contender
intensified the business and competitive environment confronting global financial centres. Yet despite these conditions and the associated pressures, The Bahamas continues to be among the world contenders for international financial services. This kind of resilience is a hallmark of the financial services sector in The Bahamas. No matter the state of the economy, no matter what changes are occurring in the financial services and regulatory landscape, The Bahamas has always maintained its status as a global leader by being able to adapt to the new normal. Three factors contribute to The Bahamas’ hardened resilience and ability to compete successfully on the global stage: true to its roots and pedigree; adopting the highest standards for compliance, innovation and client centric responsiveness; and focusing and embracing developments emerging in the New Economy. This trifold formula has been paramount in The Bahamas’ ability to attract and welcome international families, capital and business to its shores. In fact, the demand for residences and talent that The Bahamas offers, which is being embraced by family offices and those seeking wealth management services, underscores why the Bahamas location, regulatory environment and forward-looking legislation are gaining strength and acceptance as core compelling attributes of the jurisdiction. Remaining true to its roots The Bahamas is home to over 270 licensed banks and trust companies, including seven of the world's top eight private banks and 35 of the top 100 global banks. These financial institutions deliver a range of services including private banking, trusts, fund administration, accounting, legal e-commerce, insurance, corporate and maritime services. North American banks have been doing business in The Bahamas for more than a century, and European and Swiss banks have deep roots established over more than 70 years. Financial institutions from other regions with growing economies are recognising the advantages of operating in The Bahamas. Additionally, there is an excess of 800 funds that are licensed in The Bahamas and more than 60 fund administrators.
y any standards international financial centres such as The Bahamas have faced unprecedented challenges over the past several years and in even in most recent months. The ongoing Covid-19 pandemic, recent economic turbulence and never-ending scrutiny by international bodies have
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With an 80+ year track record in financial services, few jurisdictions offer the wealth management experience that exists in The Bahamas. This heritage is the basis for the strong legal framework that has been cultivated for financial services, an investment climate that has been nurtured over the decades and a stable and predictable business environment anchored by the thousands of Bahamian professionals who work side by side with expatriate colleagues in the many hundreds of service providers that call the country their home. There is a sound and proven infrastructure in place that has been built and modernized over the last 20 years. This has facilitated a highly competitive and market responsive financial service offerings and at the same time allowed The Bahamas to move forward in a very confident fashion into the new economy and the various elements of these new economies. One of the key elements of the Bahamas infrastructure is a very strong public-private partnership where communication is open and frank among all three participants that are involved with this agenda: government, regulator and private sector. This public-private partnership facilitates our engagement in creating and investing in our wealth management pedigree and areas of new economies such as digital assets, carbon credits, and ESG relevant solutions. Highest standards for innovation, client-centric responsiveness and compliance The Bahamas, as a financial center post 2000, had to become far more conscious of and proactive in reflecting global norms. As a result, our regulatory foundation has become strong. From a global connectivity perspective, we see this transition paying dividends today in light of what we endured in the past two decades. It has been a dynamic period in that we have had to be fearless in striking the right balance between being compliant and aggressive. If we perceive there is a need to tweak, we will tweak, but we will not stand still, we will always be responsive and reflect the needs of our clients and our partners. Foundations are a prime example of this fearlessness. When The Bahamas made certain changes to facilitate the introduction of Foundations, we received significant pushback. Some people said, “Wait a minute - Foundations, are these not tools for inappropriate behavior?”. But we were very confident that our regime was sufficiently strong to provide a robust, well-regulated environment in which foundations can be utilised in an appropriate manner. So, the perception of Foundations might have been negative elsewhere, but when we look some ten years later, other common law jurisdictions have followed suit.
The Bahamas is home to over 270 licensed banks and trust companies, including seven of the world's top eight private banks and 35 of the top 100 global banks
While 2020 and 2021 have been unprecedented years for many industries, for local financial and corporate service providers in The Bahamas this period brought in a host of new and amended regulations that carry the potential to transform the very landscape of the industry. The Financial and Corporate Service Providers Act, 2020 enhances the legal and regulatory framework for those providing corporate and administrative services. Meanwhile, the new Banks and Trust Companies Regulations Act, 2020 consolidates and modernises the law regulating local banks and trust companies to enhance governing powers for The Central Bank of The Bahamas. The introduction of the new Investment Funds Act, 2019 which further enhances the regulatory framework of Bahamas investment funds allows for the appointment of international fund administrators, and generally rationalises the responsibilities of all the key parties. From a level playing field perspective, within the past few years The Bahamas has passed a compendium of legislation to meet international standards regarding economic substance, removal of preferential exemptions, and automatic exchange of tax information to meet the EU and OECD's criteria on tax matters, which resulted in the European Union removing The Bahamas from its list of uncooperative jurisdictions for tax purposes in March 2020. In addition, The Bahamas maintains the highest standards in the fight against money laundering, terrorist financing and other identified risks, and therefore has been making significant strides in the fight against financial crime. The anti-money laundering, counter financing of terrorism and counterproliferation legislative, regulatory and enforcement landscapes have been thoroughly reviewed and strengthened, with The Bahamas being deemed compliant or largely compliant with 38 out of 40 standards established by the Financial Action Task Force. The Office of The Bahamas Attorney General will be submitting a re-rating of the final two of the 40 Recommendations to the CFATF – one addressing Not for Profits, and another addressing the effective regulation and supervision/monitoring of virtual asset services providers, working with the Securities Commission of The Bahamas on the latter. The intent of these latest changes is to ensure compliance with all 40 of the FATF Recommendations. All of these efforts aid in enhancing the risk profile of The Bahamas as an international financial centre, making it an attractive jurisdiction for financial services.
Wendy Warren is Managing Director at Caystone Solutions. You can email her at contact@caystone.com
The new economy Despite the recent turmoil in the crypto market, The Bahamas remains bullish on the mid to long-term prospects for digital assets. It was one of the first countries in the world to introduce a digital currency in the form of the Bahamian Sand Dollar. And the recently introduced Digital Assets and Regulatory Exchange Act (DARE) was developed with the view of how we approach the wider picture. DARE is not a standalone single solution but rather the broad features of the jurisdiction such as private banking and funds coming together to recognise why it and a broader-based Fintech capability is required. It is just the latest example of the strength and flexibility of the jurisdiction – the weaving together of elements to create a financial services fabric that is durable and responsive. The emergence of The Bahamas as a digital assets hub has resulted in companies such as FTX establishing their global headquarters in Nassau as well as a strong interest in Bahamian corporate vehicles to house the operations of digital asset businesses. At the same time, emerging developments in this space has meant The Bahamas, in being true to its market responsiveness DNA, is keeping pace with changes that are required to be a world contender as a hub for digital assets. The capital markets regulator – the Securities Commission of The Bahamas – is spearheading a raft of initiatives to advance this transformation, including Amendments to DARE to address key developments since its promulgation. The new Bahamian economy, however, is much more than digital asset leadership and companies being incorporated into the wide range of financial service providers in the country. The sector's sustainability has implications for the broader economy. The diversity within the financial services sector in terms of product offerings contributes in a meaningful way to the livelihood of the Bahamian people and the country’s economy. This contribution will become more pronounced as the country pivots to invest in diversification with a focus on the 'blue and orange' economies, which have been identified as pathways for greater economic expansion, new business opportunities and wealth creation for Bahamians and international investors alike. The Bahamas is looking to modernise its fishing industry, generating ocean sciences and marine conservation opportunities, while sustainably developing marine biotechnology, aquaculture, and deep-sea exploration initiatives. Renewable energy industries are also on the horizon. Meanwhile, as a vital component of the Bahamian economy, the tourism sector is looking to design a new tourism model that fully integrates culture and the creative industry in The Bahamas. Both tourism and financial services are actively supporting these initiatives both domestically and internationally. This foreshadows deploying the linkages when the country’s traditional economic engines engage the country’s New Economy with benefits accruing to both.
Within the past few years The Bahamas has passed a compendium of legislation to meet international standards
First class regulatory innovation
Wendy Warren of Caystone Solutions says The Bahamas has shown great resilience against the pressures facing all global financial centers
Tokenisation: The future of entrepreneurial finance
Enveloping these opportunities, the government of The Bahamas had made clear its intention to transform the jurisdiction into a regional fintech hub
Stocks have struggled and bonds have done worse, but commodities are an isolated bright spot
At the height of the emergence of digital transformation having a huge impact on entrepreneurship financing, tokens have emerged allowing entrepreneurs to receive capital easily, quickly, and efficiently
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Dr Iyandra Smith Bryan of Quantfury Trading Limited explains what tokens are, how they help companies raise capital, and the steps firms should take before issuing them
At the height of the emergence of digital transformation having an incredible impact on entrepreneurship financing, tokens have emerged allowing entrepreneurs to receive capital easily, quickly, and efficiently. Entrepreneurs are able to raise capital by issuing tokens to token holders in a similar way as a company would issue shares to its investors, in exchange for consideration (the token price). While tokens customarily are not representative of actual ownership in a company, token holders often seek to acquire tokens in anticipation that they will increase in value post their acquisition, and later being sold on a secondary market. So what is a token? A token is a digital representation of a right(s) to any tangible (financial or otherwise) or intangible assets, stored and recorded on a blockchain. There are different concepts of tokens: tokenised securities, security tokens, utility tokens, or payment tokens. Utility tokens are primarily focused on supporting and developing a community-based ecosystem by awarding consumptive rights to token holders, while payment tokens are a means of payment in a blockchain-based ecosystem.
s early as the 2000s, entrepreneurs have sought innovative and dynamic methods of raising capital from the public. We have seen this evident in the surge of crowdfunding platforms attracting professional and retail investors that have been at the center of digital transformation.
Tokenised securities are customarily considered to be a traditional, regulated security type with a digital wrapper; that is, where the proof of ownership in the company is recorded on a distributed ledger. On the other hand, security tokens tend to have a much more expansive scope and inherent characteristics that are formulated to constitute or represent assets typically of an underlying financial type. For example, participation in a company’s earnings streams, or an entitlement to dividends or interest payments, or a combination thereof packaged together. Such tokens may be classified as equities, bonds, collective investment schemes, or derivatives, dependent upon their economic functions and terms. In modern times, in order to take advantage of the heightened process efficiency and greater ability to access global liquidity pools, we have seen new alternative assets formulated as a result of isolating specific economic functions, such as tokenised cash flows from real estate projects or royalty cash flows from works of art. For the purpose of this article, we will focus on security tokens. Security tokens introduce a myriad of benefits to entrepreneurs: first, they create an innovative new financing and capital raising model that leverages scalable efficiencies. They provide enhanced and easily accessible liquidity. Moreover, by removing third-party intermediaries traditionally involved in the post-trading process, tokenisation offers significant cost-efficiency benefits. A study by Ghent University concluded that tokenisation could offer total cost savings of up to €4.6bn (£3.93bn) by 2030, provided adoption rates were high. Further, tokens provide customisable opportunities and bridge legacy finance with the new world of digitisation, gleaning benefits from each. Customising and designing security tokens carefully can equip entrepreneurs with heightened abilities to raise more capital easily and quickly. In addition, a data flow free of friction, provided that there is a regulatory framework and adequate policies in place, permits greater transparency. Tokenisation takes place when a new blockchain monopolising an underlying protocol of various cryptocurrencies is instituted by the company issuing the tokens, and thereafter the tokens issued by the company are sent directly to the token holder’s digital wallet address or through a crypto-exchange. Blockchain is a “shared distributed ledger that facilitates the process of recording transactions or tracking assets in a business network”. Thus, blockchain is a distributed database for recording transactions. The word ‘distributed’ means there is no centralised storage location such as a central server or a cloud computing platform. Instead, the information and technical transactions are spread across a wide network of computers.
Dr Iyandra Smith Bryan is the General Manager of Quantfury Trading Limited, Nassau, The Bahamas. You can reach her at iyandra.smith@quantfury.com
The blockchain concept was first discussed in a Bitcoin white paper, written by Satoshi Nakamoto, in which he referred to the distributed ledger as “a chain of blocks .” In this white paper, Nakamoto suggested a peer-to-peer distributed ledger platform for the processing of financial transactions without relying on trusted third parties for their execution. The network is founded on a peer-to-peer distributed architecture which necessitates consensus calculations and/or algorithms to ensure that the transactions across the blockchain network are duplicated so that the ledger maintains its integrity. What this means is that anyone with access to the blockchain network will be able to see the same information. Blockchain networks can be public and accessible by anyone, such as Bitcoin and Ethereum, or private and permissioned, such as a corporate network for asset tracking. Beneficially, trust is incorporated into the structure of the network. In some jurisdictions, tokens continue to be unregulated, while in other jurisdictions, regulatory guidance has been issued or a regulatory framework has been put in place to govern token offerings. In the past, some token issuers took the position that so long as the token being offered was not a security under the laws of the jurisdiction if its issuance, there was no need to consider whether the token constituted a security in any of the jurisdictions in which the token may ultimately be purchased or resold. It is clear that this reasoning is faulty. Before issuing tokens, companies should ensure the requisite regulatory and legal analysis is undertaken to determine whether regulation would apply and their tokens could be considered a token, and the steps that must be taken to ensure adequate compliance. If the primary goal is to raise money, rather than for example to build a network, legal and commercial arise are likely to arise that require a consideration before conducting a token sale.
When determining this, the Supreme Court laid down the following four-prong test: Is there: (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit, (4) from the managerial efforts of others? Factors that are relevant to this four-prong inquiry center on the manner in which the token is offered and/or distributed. If a token offering is considered to be a securities offering, then it must adhere to all securities law requirements, which include requirements to register, cybersecurity requirements, AML and market manipulation requirements, among other regulatory requirements. Further, firms that are handling the token offering, including any exchange or intermediary trading, are also subject to such securities law requirements. In applying the Howey four-prong test, the SEC has pursued a number of avenues for regulation. In 2017, the SEC applied the Howey test to digital assets for the first time, when it found that the sale of Decentralised Autonomous Organisation (DAO) digital tokens was an unregistered securities offering. The DAO was issued via a Swiss foundation, and the SEC’s report on the token offering confirmed that existing US securities law framework applies to token offerings and must be considered even in the case of token offerings occurring primarily outside of the US. The SEC has also issued further regulatory guidance clarifying its view that the vast majority of token offerings are often structured as offerings of securities, for the primary reason that token holders acquired them very likely for the exclusive purpose of later profitting from an increase in its value, emanating from the company’s business model and strategies. In The Bahamas, the sale or redemption of a digital token in exchange for fiat currency or another digital assets is expressly regulated by the Digital Assets and Registered Exchanges Act, 2020. This ‘DARE Act’ defines what triggers registration of an initial token offering under the legislation. An issuer that intends to offer digital tokens for sale in or from within The Bahamas through a token offering shall prepare an offering memorandum and shall comply with the regulations, rules, and guidelines to be promulgated under the DARE Act. It applies to (a) any person who as organiser, issuer, founder, purchaser, or investor participates in the formation, promotion, maintenance, organisation, sale, or redemption of an initial token offering; and (b) any legal entity carrying on a digital asset business irrespective of the physical location from which the activity is carried out. Importantly, the DARE Act expressly excludes tokenised securities, non-fungible tokens, electronic representations of fiat currencies, virtual currencies, and certain other types of tokens are expressly exempted from the DARE Act. What is important is that as entrepreneurs seek to raise financing through token offerings, they remain cognisant of the trend of financial regulators to scrutinise and review token offerings, whether in the jurisdiction of issuance or the jurisdictions in which the tokens are marketed or resold. Tokenisation creates new opportunities for raising capital, heightens access to liquidity in a cost-effective manner, and boosts access to new markets in an efficient and more readily accessible way.
For example, in the United States, the Chairman of the Securities Exchange Commission (the SEC) has provided guidance to the effect that the SEC will apply the tests and standards that have been laid down by the Supreme Court in the well-established case, Securities Exchange Commission v WJ Howey Co (Howey – 328 US293). In Howey, the Supreme Court held that the offering by a token constituted a security offering subject to the Securities Act.
What better place for a captive owner to conduct board meetings and then enjoy all The Bahamas has to offer afterwards?
Funds needed flexibility in selecting administrators, and non-accredited investors expected vetted and licensed investment managers
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Christina Rolle of the Securities Commission of The Bahamas explores the new and evolving securities and investment environment in the country
solve problems but they are also opportunities to innovate. We approach them as such, with the view that what will distinguish the Securities Commission of The Bahamas (SCB) is our deep commitment to providing pragmatic solutions in response to regulatory risk. To illustrate this, the investment funds legal framework, prior to the promulgation of the 2019 legislation, had not kept pace with international best practices and standards. It had supported The Bahamas’ wealth management industry at the start of the millennium, but by the time The Bahamas underwent its peer review under the International Monetary Funds’ Financial Sector Assessment Programme in 2012, the framework was found deficient in several key areas. As for the digital assets space, despite its growing importance to investors and wealth managers, there was no legal framework in place to provide much sought-after legal and regulatory clarity. In both instances, the SCB found itself positioned to demonstrate its innovative prowess, as it set out to update or develop the respective legislation. The Commission’s approach to these initiatives can be simplified into developing a practical understanding of regulatory concerns as well as stakeholder needs (the problems to be solved), prioritising those needs, and determining and implementing pragmatic, sustainable, best-in-class regulatory solutions.
he Digital Assets and Registered Exchanges Act, 2020 (DARE Act/DARE) and the Investment Funds Act, 2019 (the IFA/the IFA, 2019) have gained international acclaim for their innovative, pragmatic responses to vexing regulatory concerns. Legislative initiatives are opportunities to
Need: Pragmatic licensing triggers for regulating investment funds Under the IFA, 2019, an investment fund that carries on/attempts to carry on business in or from The Bahamas must be licensed as a Standard, Professional, or Specific Mandate Alternative Regulatory Test (SMART). “Carrying on business” in this context now applies to an investment fund that is incorporated in The Bahamas, or offered for sale to non-accredited investors in The Bahamas. Therefore, investment funds are eligible for licensing based on the activity they conduct or intend to conduct, and who will be impacted by those activities, rather than whether or not certain service providers to the fund are located or licensed in The Bahamas. Need: Righting regulatory responsibility among related parties Absent of a framework for the regulation of investment managers, the previous investment funds legislation consequently burdened the investment fund administrator with all responsibilities for a Bahamas licensed investment fund. This may have met the needs of the primary users of investment funds in the early 2000s – private banks and trust companies servicing their clients – but as the funds industry evolved, this misalignment of responsibilities became too onerous for administrators and did not address the lacuna of fiduciary duties that should be the responsibility of the investment manager. It also meant that administrators licensed in The Bahamas were at a disadvantage to administrators licensed in other jurisdictions where they may not be saddled with fiduciary responsibilities. Funds needed flexibility in selecting administrators, and non-accredited investors expected vetted and licensed investment managers. By developing a framework for the licensing and supervision of investment managers, the IFA framework now answers the call in both areas.
Ms Christina R Rolle is the executive director of the Securities Commission of The Bahamas, having been appointed effective 26 January 2015. Ms. Rolle has over 25 years of experience in the financial services industry. Prior to her appointment as Executive Director, Ms. Rolle has acted as Director and Deputy CEO for a prominent international private bank and held various senior managerial positions with local and other international institutions including Head of Trust and Fiduciary, Head of Risk, Compliance and Corporate Governance and Manager of Banking Services. Ms. Rolle was a member of the FATCA advisory group for the Government of The Bahamas and has served on the Board of Directors of The Bahamas Financial Services Board (2009 – 2012) and the Society of Trust and Estate Practitioners (STEP), Bahamas branch (2003 – 2005). In March 2020, Ms. Rolle was elected Vice Chair of the Inter American Regional Committee (IARC) of the International Organization of Securities Commissions (IOSCO), for a two-year term. As Vice Chair of IARC, Ms. Rolle is a member of the Board of Directors of IOSCO. In April 2020, Ms. Rolle was appointed to The Bahamas’ Economic Recovery Committee by Prime Minster the Most Hon. Dr. Hubert Minnis, to make recommendations to the Cabinet on the long-term economic recovery of The Bahamas economy, including job-creation and stimulating small business recovery and development in response to COVID-19. Ms Rolle holds an MBA from Kellogg School of Management, Northwestern University and is an alumni of Harvard Business School.
Administrators from any prescribed jurisdiction A Bahamas-based fund is no longer required to appoint an investment fund administrator in The Bahamas to provide its principal office. Investment fund administrators for Bahamian investment funds may be licensed under the Investment Funds Act, or licensed and operating in any prescribed jurisdiction anywhere in the world. This approach opens the door for international administrators to license funds under the Act. Appointment of investment fund managers Under the IFA, funds must appoint an investment fund manager, except in some very specific circumstances. The investment manager must be licensed if the fund is sold to non-accredited investors but does not need to be licensed if the fund is being sold to accredited investors only. Importantly, investment funds may appoint investment managers licensed or registered in prescribed jurisdictions without the need for licensing of the investment manager in The Bahamas. In such cases there is a simple registration process. Custodians and operators Funds must appoint a custodian, who must be independent of the administrator, manager, and operator of the investment fund, and is obliged to segregate the cash and other assets of the fund from those of the custodian itself. Funds are also required to appoint operators, based on how the fund is structured. Operators have responsibility for the operation of the fund in compliance with the IFA, and the fund’s constitutive documents. They are subject to fit and proper assessment, and must be independent of the administrator unless exempted from this requirement, or structured as an investment condominium.
EU markets access Finally, the IFA, 2019 is also compliant with the European Union’s Alternative Investment Fund Managers Directive, or AIFMD. This allows The Bahamas to qualify for passporting under the Directive. The framework grants a distinct license for managers operating in the European Union or managing funds from the EU. The IFA, 2019 also addresses the EU’s standards for investment funds regarding the regulation of auditors. Under the framework, all funds that do not submit to a full annual audit are required to receive a certification, every three years, from a qualified accountant that its books are being maintained within IFRS or US GAAP standards. Auditors must be approved by the Commission to act on behalf of regulated persons. Need: Legal certainty regarding digital assets business The SCB’s primary objective in developing the DARE Act was to bring regulatory certainty to the dynamic, fast-paced and evolving crypto space. The Commission had observed the potential the space represented for The Bahamas’ wealth management industry with increasing investor interest in fintech and crypto assets globally. The SCB fielded interest from international fintech operators seeking to operate in a well-regulated, compliant jurisdiction. Enveloping these opportunities, the government of The Bahamas had also made clear its intention to transform the jurisdiction into a regional fintech hub. Need: Regulatory flexibility as the space develops Given that the digital assets or crypto space was (and is) still in its infancy, or in any event far from maturity, it was clear to the Commission that it needed to establish a legislative framework that was not overly prescriptive. This allows the jurisdiction to be nimble and able to react to new risk trends, or market development opportunities, as the evolving landscape demands. To develop the legislation, the Securities Commission initially conducted a benchmarking exercise of 13 select jurisdictions, honing-in on regulatory approaches, global standards and best practices in the digital or virtual assets space. The Commission reached out to other regulators with relevant experience, and consulted with industry and other stakeholders to develop the legal framework. The DARE Act came into effect on 14 December 2020. The legislation provided sought-after clarity, and successfully established a Bahamian legal and regulatory framework for the registration of digital token exchanges and for the issuance of digital tokens via initial token offerings. DARE provides key legal definitions for salient terms including digital asset business, digital assets service provider, digital token, non-fungible token, utility token and virtual currency token, among others. It intentionally does not set out to answer the question of whether a digital asset is a security or not. Throughout the Act, although various types of digital assets are clearly defined and the legislation is clear about what is in scope for regulation, digital assets or crypto are recognised as their own asset class and by giving the space its own regulatory regime, The Bahamas has removed the narrow question, and its inherent uncertainty, of whether a crypto is a security and instead provided a framework whereby digital assets can be addressed holistically.
Enveloping these opportunities, the government of The Bahamas had made clear its intention to transform the jurisdiction into a regional fintech hub.
Pragmatism is a key consideration in The Bahamas’ approach to regulation, and the jurisdiction continues to watch as trends indicate a move toward securities and other asset classes becoming tokenised
Need: Compliance with AML/CFT/PF Standards How DARE addresses global anti-money laundering and countering the financing or terrorism and proliferation of weapons of mass destruction (AML/CFT/PF) standards is vitally important. The Commission continues to hone in on the Financial Action Task Force’s Recommendation 15, and its evolving explanatory/interpretative notes. In keeping with the principles, under DARE, digital assets business is subjected to the primary national AML/CFT/PF legislation, including the Proceeds of Crime Act, 2018, the Anti-Terrorism Act, 2019 and the Financial Transactions Reporting Act, 2018. In keeping with the FATF Recommendations, DARE focuses AML/CFT supervision and oversight on the digital asset service provider, rather than the new technologies themselves. The term ‘beneficial owner’ in DARE is assigned the same meaning as in The Bahamas’ Proceeds of Crime Act, harmonising the definition with this key legislation. DARE requires financial institutions to perform initial risk assessments prior to launch. The Act requires digital assets businesses to have systems in place to prevent, detect and disclose money laundering, terrorist financing and suspicious transactions. They must also comply with the Commission’s rules, polices, and guidelines on risk management and the prevention of money laundering and terrorist financing. On 16 March 2022 the Commission published its AML/CFT/PF Rules for DARE. These Rules are based on FATF’s Recommendation 15 and its interpretative notes and provides specific requirements for the digital assets space. They are supplementary to DARE and are also expected to evolve as the space evolves. Conclusion Pragmatism is a key consideration in The Bahamas’ approach to regulation, and the jurisdiction continues to watch as trends indicate a move toward securities and other asset classes becoming tokenised. We are also mindful of recent emerging risks that came to the fore in the aftermath of the great ‘crypto winter’. These risks must now be addressed in the regulatory framework and clear best practices must be established to protect investors. If you know anything about The Bahamas, you know we do not view our size as a handicap, but a reality we can leverage to our benefit. The access that we as regulators have to industry players and regulatory addressees, policy makers, and the consumers and investors we aim to protect, allows us to identify and act on urgent matters, and to be innovative in providing pragmatic solutions to regulatory concerns.
Pragmatism is a key consideration in our approach to regulation, and we continue to watch as trends indicates a move toward securities
Investments – the search for a safe harbour
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Chris Illing of ActivTrades says The Russian president has brought decades of peace in Europe to an end. His war in Ukraine, combined with the Coronavirus pandemic, which began today’s cycle of high inflation in 2020, is causing a great deal of uncertainty in the financial markets. Investors in commodities, however, have done well.
homes and increasingly reliable internet connectivity. Nowadays, anyone can easily trade in securities on the internet. Online brokers make this possible, offering investors access to global trading venues through software and FinTech. Traps for the unwary If someone wants to sit at home and invest on his computer or smartphone, he should compare the offers of the online brokers with each other. Although they offer their services at considerably lower prices than direct banks, i.e. banks with no branch networks, they are not completely free of charge. Sometimes the fee-free depots and trades are offset by return-reducing third-party flat rates, negative interest, exchange fees and trading commissions. In addition to the fees, the investor should pay attention to the asset classes in which he wants to invest when choosing his online broker. Not every service offers trading in crypto-currencies or contracts-for-difference, for example. It is also worth comparing the services with each other, because not every online broker has a multi-language-speaking customer service or can be reached by phone. The user interface should be clearly designed and easy to use. An online broker that offers a free demo-account for testing is recommended.
022 has been a challenging year for the international investor. During the height of the pandemic, the volume of mobile trading by retail traders grew enormously because people had plenty of surplus disposable income, more spare time in which to trade from the comfort of their
It is important for every investor in the stock market to have a balanced portfolio. Anyone who invests in stock listed all over the world and who relies on the large, well-known global stock indices is not going to feel the effects of volatility in the markets as badly as, for example, an investor who depends on Russian companies. One should not look at the next few weeks here, but at the next few years. The asset class du jour? The inflation rate in the USA was recently 8.5% for the 12 months ending in March 2022. Crypto-assets are the most high-profile instruments that investors are using to protect their portfolios against inflation. They are, however, only one type of asset. Investors can look to real assets as well. Gold, for example, should continue to do well during the rest of 2022. The price of this precious metal rises when inflation is high but may dip if interest rates rise. The real interest rates, i.e. the interest rates after inflation, are therefore decisive and these are likely to remain negative globally. Even if the US Federal Reserve were to raise interest rates to 2% by the end of next year, which would be extremely high, real interest rates would still be well into the red given inflation of 4%. This should elevate the Gold price. In a year in which stocks have struggled and bonds have done worse, commodities are an isolated bright spot. It is important to note that investors in commodities have been able to gain this year from increases in the prices of raw materials. Investors obviously know that energy prices have surged this year, with the war between Russia and Ukraine interrupting the flow of oil and gas. The conflict has had its repercussions in many other commodity markets as well, since Russia and Ukraine export a whole host of commodities including wheat, corn nickel and palladium. Along with exchange-traded products that target single commodities, several multi-commodity exchange-traded funds found themselves to be very popular.
Chris Illing is Office Manager at ActiveTrades and can be reached on +1 242 603 5200 or at englishdesk@activtrades.bs
ETF investments Exchange-traded funds are popular with our investors as trading instruments. An ETF is a type of pooled investment security that operates much like a mutual fund. The fund tracks a particular index, sector, commodity or other asset but, unlike mutual funds, an ETF can be purchased or sold on our trading platforms in the same way that a regular stock can. QQQQ trades on the Nasdaq exchange and is one of the more popular ETFs. This security offers broad exposure to the tech sector by tracking the Nasdaq 100 Index, which consists of the 100 largest and most actively traded non-financial stocks on the Nasdaq. Alternatively, the Direxion Daily S&P Biotech Bear (LABD) 3X Shares seek daily investment results, before fees and expenses of 300% of the performance of the S&P Biotechnology Select Industry Index. The first US Bitcoin-linked ETF is the ProShares Bitcoin Strategy ETF (BITO.US), which offers investors a familiar way to gain exposure to bitcoin returns but with the liquidity and transparency of an ETF. An investor can expose his portfolio to Bitcoin easily with this. When BITO was launched back in October last year, it became the fastest ETF to reach $1bn in assets under management. The trials and tribulations of investing If a retail investor trades in an ETF, especially a crypto-related one, he will gain some advantages if he does so with the help of a regulated broker. In addition to various problems that beset the spot market itself, the unassisted investor faces some complex transactions if he wants to invest in bitcoin directly, even through an exchange. If he looks at the disclosures made by one of the exchanges that offers bitcoin, he might see a text in the small print that says “you could lose all your money in a fork.” He must then spend some time on the internet to find out what a fork is on the blockchain. Many people are comfortable with this process, but there are certainly some who are not amenable to the challenges of dealing in a new asset like that in its raw form. Then, of course, there are the issues that surround custody and wallets. Once the investor is in an exchange, he has only just embarked on some tough decision-making. He must then determine whether the exchange ought to hold his wallet, whether he ought to hold his own wallet, whether he ought to hold his wallet and keep his code on a memory stick, or on a piece of paper in a vault, and so on. Many small investors are looking for simpler ways to take part in the crypto-market and brokers offer them one way of doing this.
The evolution of currency in The Bahamas
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When it comes to currency, an innovative jurisdiction requires innovative legislation, says Alexander Christie and Vanessa Hall of McKinney, Bancroft & Hughes, who explain how The Bahamas implemented a Blockchain-based digital currency
The Bahamas was the first country to implement a government-backed blockchain-based Central Bank Digital Currency (CBDC). A CBDC is “a digital form of central bank money, which is legal tender created and backed by a central bank that represents a claim against the central bank and not against a commercial bank or a Payment Service Provider…”¹. Unlike other digital currencies, CBDCs are regulated and centralised by the Central Bank. The Central Bank of the Bahamas 2020 Act (the Central Bank Act) made the innovative decision to include inter alia “electronic money” in its definition of currency. Legislators went a step even further and implemented the Bahamian Dollar Digital Currency 2021 Regulations (BDDC Regulations). The BDDC Regulations define BDDC as an electronic version of the Bahamian Dollar issued by the Central Bank pursuant to the authority conferred upon it by the Central Bank Act 2020, fully backed by reserves held by the Central Bank and which represents a direct claim against the Central Bank². According to the BDDC Regulations, a Bahamian Dollar Digital Currency wallet means a digital wallet issued by a wallet provider that holds BDDC. The BDDC Regulations provide inter alia for the regulation of wallet services offered by wallet providers who must be registered under the Central Bank Act. Not only does the BDDC Regulations require a clear but detailed application process, it also provides safeguards for the protection of the currency in those wallets by outlining conditions by which wallet providers must satisfy before registering as a wallet provider or must satisfy in order to continue to provide such service.
volve or die. The world is swiftly changing and the inclusion and use of digital currencies is almost essential to keeping up with the financial times. Central Banks around the world are experimenting with various forms of digital currencies and The Bahamas is no exception.
In addition to the regulatory provisions already encompassed in the BDDC Regulations, The Central Bank is empowered, as and in such manner as it considers appropriate, the flexibility to give further regulatory protection where deemed fit. The Central Bank may issue and publish such codes, rules, guidelines, policy statements and practice notes for the imposition of rules and standards concerning the imposition of limits or restrictions on wallet balances and transaction values for different categories of wallet holders and otherwise providing guidance and in:
Sand Dollar is the digital form of the Bahamian dollar. The currency is kept in a user’s digital wallet via mobile phone app or by using a physical card.
Sand Dollar is the digital form of the Bahamian dollar issued by the Central Bank of The Bahamas
Sand Dollar is the digital form of the Bahamian dollar. It is kept in a user’s digital wallet via mobile phone app or by using a physical card.
Furthermore, the Central Bank may issue written directions, generally or specifically, to any wallet provider in any circumstance where the Central Bank is of the view that: (i) it is necessary or expedient for ensuring the integrity or proper management of BDDC and the technology platform; (ii) it is necessary or expedient for the effective administration of these Regulations; (iii) it is of public interest; (iv) a person is engaged in, or is about to engage in, any unsafe, unsound or unfair practice with respect to BDDC; or (v) a person has contravened or failed to comply with, or is likely to contravene or fail to comply with, the provisions of the BDDC Regulations or any codes, rules, guidelines, policy statements and practice notes given under the regulation or other legislation⁷. The Bahamas appreciates the fast maturing and evolving industry and was diligent in structuring its regulations not only to ensure high standards of regulatory protection for today but also a quickly coming tomorrow that may not wait for legislative machinery to adjust. The amendment to the Central Bank Act and the implementation of the BDDC Regulations lays the framework and foundation for the Bahamian CBDC called Sand Dollar. Sand Dollar is the digital form of the Bahamian dollar issued by the Central Bank of The Bahamas⁸. The Sand Dollar is issued through authorised financial institutions and the currency is kept in a user’s digital wallet via mobile phone app or by using a physical card.
Furtherance of its regulatory objectives; Relation to any matter relating to any of the functions of the Central Bank under any of the provisions of these Regulations; and Relation to the operation of any of the provisions of these Regulations⁶.
The evolution of currency begun before the Sand Dollar, but this CBDC ensures the future of Central Bank issued centralised currency. Kristalina Georgieva, Managing Director of the IMF, sums up the objective of CBDCs perfectly: “The history of money is entering a new chapter. Countries are seeking to preserve key aspects of their traditional monetary and financial systems, while experimenting with new digital forms of money¹². The Bahamas took a bold and innovative first leap in accomplishing what no jurisdiction has done before and have well equipped herself for the quick approaching tomorrow’s brave new world.
1 https://consensys.net/solutions/payments-and-money/cbdc/ 2 Bahamian Dollar Digital Currency Regulations, 2021, section 2 3 Bahamian Dollar Digital Currency Regulations, 2021, section 8 4 Bahamian Dollar Digital Currency Regulations, 2021, s. 10 5 Central Bank Act, 2020 s. 13 6 Central Bank Act, 2020 s. 21 7 Central Bank Act, 2020 s. 22 8 www.sanddollar.bs/ 9 www.sanddollar.bs/faqs/is-the-country-going-cashless 10 www.sanddollar.bs/faqs/why-does-the-central-bank-of-the-bahamas-think-we-need-this 11 www.sanddollar.bs/security 12 Georgieva, Kristalina. The Future of Money: Gearing up for Central Bank Digital Currency. www.imf.org/en/News/Articles/2022/02/09/sp020922-the-future-of-money-gearing-up-for-central-bank-digital-currency
a) b) c)
Alexander Christie is a Partner at MBH. You can reach him at 1-242-322-4195 or ambchristie@mckinney.com.bs
Vanessa Hall is an Associate at MBH. She can be reached at 1-242-322-4195 or at vmrmiller@mckinney.com.bs
Ultimately, a CBDC, or in The Bahamas the referenced BDDC, is an extension of paper money also known as fiat currency. Fiat currency is legal tender issued by the Central Bank that we know as (bills) notes and coins. The use of fiat currency is still the most popular method of payment. Some may argue that it is the most secure exchange and it is certainly the fastest! Payment via credit and debits cards, while still considered a digital payment, is still fiat currency moved by respective banks. It is not as secure as a fiat currency transaction, due to the threat of accounts linked to such cards being hacked or by a card being compromised, but it is certainly efficient. Both physical fiat currency and digital fiat currency have their pros and cons and it appears as if the objective of the CBDC is to merge those pros and cons. The merger births secure and quick payments. Why are central banks going down this path? Traditionally, Central Banks have been participating in two kinds of payment transactions – fiat currency and intermediary bank payments. Technology is progressing in both of those areas and resulting in the implementation of other (decentralised) digital currencies. There are arguments that physical fiat currency is on its way out; however, the Central Bank has advised it has no plans to eliminate cash⁹. The exploration of CBDCs is becoming more popular in emerging markets. The motivation has been financial inclusion and decreasing costs of handling cash. This school of thought is in line with Sand Dollar’s objective which is to “[a]chieve greater financial inclusion, cost-effectiveness, and provide greater access to financial services across all of The Bahamas¹⁰.” So why is this even remotely beneficial to Sand Dollar holders? Sand Dollar allows for an enhanced payment process, reduced transaction costs and it also boasts better security by the use of multi factor authentication, wallet security and cyber security assessment¹¹.
Ultimately, a CBDC, or in The Bahamas the referenced BDDC, is an extension of paper money also known as fiat currency. Fiat currency is legal tender issued by the Central Bank that we know as (bills) notes and coins. The use of fiat currency is still the most popular method of payment. Some may argue that it is the most secure exchange and it is certainly the fastest! Payment via credit and debits cards, while still considered a digital payment, is still fiat currency moved by respective banks. It is not as secure as a fiat currency transaction, due to the threat of accounts linked to such cards being hacked or by a card being compromised, but it is certainly efficient. Both physical fiat currency and digital fiat currency have their pros and cons and it appears as if the objective of the CBDC is to merge those pros and cons. The merger births secure and quick payments. Why are central banks going down this path? Traditionally, Central Banks have been participating in two kinds of payment transactions – fiat currency and intermediary bank payments. Technology is progressing in both of those areas and resulting in the implementation of other (decentralised) digital currencies. There are arguments that physical fiat currency is on its way out; however, the Central Bank has advised it has no plans to eliminate cash⁹. The exploration of CBDCs is becoming more popular in emerging markets. The motivation has been financial inclusion and decreasing costs of handling cash. This school of thought is in line with Sand Dollar’s objective which is to “[a]chieve greater financial inclusion, cost-effectiveness, and provide greater access to financial services across all of The Bahamas¹⁰.” So why is this even remotely beneficial to Sand Dollar holders? Sand Dollar allows for an enhanced payment process, reduced transaction costs and it also boasts better security by the use of multi factor authentication, wallet security and cyber security assessment¹¹. The evolution of currency begun before the Sand Dollar, but this CBDC ensures the future of Central Bank issued centralised currency. Kristilina Georgina, Managing Director of the IMF, sums up the objective of CBDCs perfectly: “The history of money is entering a new chapter. Countries are seeking to preserve key aspects of their traditional monetary and financial systems, while experimenting with new digital forms of money¹². The Bahamas took a bold and innovative first leap in accomplishing what no jurisdiction has done before and have well equipped herself for the quick approaching tomorrow’s brave new world.
A few of these conditions include: (i) having adequate software and hardware components; (ii) it has taken adequate measures for the purpose of safeguarding the funds of wallet holders; (iii) it has clear rules to resolve disputes associated with the provision of wallet services; (iv) it has a safe and reliable information technology system and adequate interfaces to ensure interoperability, access and data protection, as well as robust contingency and disaster recovery procedures; and (v) it has effective arrangements in place for the protection of client assets and money arrangements consistent with any prescribed rules or guidelines issued by the Central Bank³. While the BDDC Regulations have strict criteria for its application process to be a registered wallet provider, there are also strict guidelines to maintain such registration. Registration of a wallet provider can be suspended or cancelled if the Central Bank determines the wallet provider inter alia: (i) has not distributed BDDC within 12 months of the date on which the registration was approved; (ii) has obtained approval for registration through false statements or any other irregular means; (iii) ceases to meet the criteria set out in the BDDC regulations; (iv) is contravening the provisions of these Regulations or any other law of The Bahamas; (v) is carrying on its business in a manner that is detrimental to the public interest or to the interests of its wallet holders; and (vi) is contravening any term or condition subject to which the registration was granted⁴. Although only the Central Bank can issue BDDC, the need for wallet providers creates investment opportunities in The Bahamas for wallet services to be offered. Pursuant to the authority conferred upon the Central Bank by the Act, the Central Bank may issue any amount of BDDC as the Central Bank shall deem fit, having regard to its obligations under the Act to promote and ensure the oversight of a safe, sound and efficient national payment system. Moreover, no person other than the Central Bank may issue in The Bahamas, the currency of The Bahamas as electronic money⁵.
Presently, all captives are licensed as external insurers
Over the past 10 years, the number of licensed captive insurance entities registered in The Bahamas has grown – at first very rapidly and, in the last five years, steadily. As a result, growth has occurred in overall net premium volume along with the expansion in the number of parent company regions throughout the US and Europe, says Carl Culmer, Manager for Policies and Practices at the Insurance Commission of The Bahamas
operational oversight to locally registered insurance managers, financial and corporate service providers and other financial service professionals such as lawyers and accountants. SMEs across varying industries are all interested in the Bahamian captive market. Their aim is to minimise losses that they might incur during the course of their operations. Such an entity might be either a stand-alone company, i.e. a single-parent company, or a registered segregated account in an already licensed segregated account (captive insurance) company. A stand-alone entity is incorporated, while a segregated account (or cell captive) forms part of a registered Segregated Accounts Company. A typical company considers the size, nature and complexity of its operations before applying for the appropriate category of licence that best fits its strategy and commercial interests.
he growth in The Bahamas’ captive market is largely attributed to small-to-medium sized entities (SMEs) seeking to set up their own segregated accounts. This option has proven to be cost-effective for those SMEs, especially since they can and do outsource administrative and
Presently, all captives are licensed as ‘external insurers’ in accordance with the External Insurance Act 2009. The Bahamas continues to register captives that insure risk associated with various industries such as medical and healthcare administration, retail and wholesale distribution, agriculture, construction and real estate. The lines of business extended as coverage within these structures include workers’ compensation benefits, cyber-risk, directors’ and officers’ (D+O) insurance and excess liability. After a spate of growth earlier in the last decade, the aggregate number of segregated accounts continues to demonstrate gradual growth over the past three years. The chart below outlines the number of external insurers identified as captives for the period 2019 – 2021.
Captive insurance in The Bahamas – a success story
Despite the lingering effects of the global pandemic of 2020, international companies are still expressing interest about the establishment of captives in The Bahamas. The insurance industry continues to demonstrate its financial resilience to economic shocks. The effective use of captives can also serve as an additional absorber for companies that have suffered from such global shocks. The Bahamas’ participation in the captive insurance industry dates back to the 1960s. Given the islands’ rich history in this niche industry, the government has taken steps in recent years to ensure this business actively contributes to the overall growth of the financial services sector. Local insurance managers and other financial intermediaries are still finding ways to promote both their own services and the jurisdiction as a whole in the captive market. The Bahamas Financial Services Board (BFSB) has helped them do so, highlighting the jurisdiction as a competent and competitive international financial centre that promotes synergies between the industries of the financial services sector. The commission, along with the BFSB and the country’s captive insurance professionals, participates actively in the captive insurance industry’s events and training seminars. This ensures that all stakeholders remain well-acquainted with the industry’s trending topics, challenges and opportunities. The commission’s partnership with the BFSB has extended the promotional outreach of the jurisdiction as a captive domicile and has provided a forum in which meaningful discussions take place. The BFSB, along with the commission, will continue to work with the government of The Bahamas to target the captive insurance and reinsurance industry as an area of economic interest. Companies that want to base their insurance business in The Bahamas should note the key regulatory requirements for approval. The external (captive) insurer application process includes the following:
1. A scheduled pre-application meeting to discuss the proposed business plan. 2. Submission of a completed application that includes, but is not limited to, the following:
Once the conditions of approval are met, the ICB issues a certificate of licence to the applicant. Every captive insurance company in The Bahamas must, among other things, satisfy the following requirements.
The present legislation has certainly helped the insurance sector to grow to a satisfactory degree and the commission is determined to keep the applicable law competitive with the laws of other jurisdictions. It also remains intent on keeping its regulatory and supervisory regime effective and in line with the high standards of the International Association of Insurance Supervisors and the recommendations submitted by the Financial Action Task Force. In 2021, as part of its strategic plan to amalgamate legislation, the commission began a review of the jurisdiction’s two principal insurance laws – the Insurance Act, 2005 and the External Insurance Act, 2009. The purpose of the review, which is still in progress, is to streamline regulatory and supervisory requirements and to enhance legislation to help insurance structures. The commission has collaborated with industry associations, professionals and the general public as part of its consultative effort. Individuals and companies have been keen to use these discussions to find out more about the captive market with a view to establishing captives of their own to support their medium-to-long-term risk-management strategies.
A detailed business plan; An actuarial review or feasibility study; Projected financial statements for three years (inclusive of balance sheet, income statement and solvency calculations); Sample policies to be marketed and sold by the applicant; Details of the reinsurance programme (where applicable); and Due diligence’ documents for proposed shareholders, directors and senior officers.
3. Review of the application and consideration for approval by the commission’s Board of Commissioners. This is generally a two-stage process. Subject to satisfactory review of the application, the commission initially grants the applicant approval in principle with conditions. Applicants are then given 30-60 days to satisfy these conditions of approval.
The insurance industry continues to demonstrate its financial resilience to economic shocks
A minimum of two directors. The appointment of a resident representative in the Bahamas at whose office books and records must be maintained. A minimum of US$100,000 in share capital (additional regulatory capital may be required depending on the nature, size, and scope of the proposed entity). Application fee of US$100 (stand-alone) and US$250 (per segregated account). Annual (stand-alone) renewal fee of US$2,500.
• • • • •
a) b) c) d) e) f)
Carl Culmer is Manager for Policies and Practices at the Insurance Commission of the Bahamas He can be reached on +1 242 397 4183/376 7242 or at carlculmer@icb.gov.bs
Information about captive insurance in The Bahamas can be found on our website at www.icb.gov.bs. Interested persons may also contact info@icb.gov.bs
External insurers in The Bahamas
We have adapted to the 'new normal' of paperless processing
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The Coronavirus has caused immense disruption to business throughout the financial services industry, both in The Bahamas and abroad. Some fund administrators, however, have taken it in their stride. This is the story of one business that benefited from early updates to its practices in ways that it could not envisage before the virus struck.
Before the pandemic, we all tended to view change as inevitable. However, the general pace of change in our industry was moderate until Covid arrived. That pace then accelerated enormously and catapulted us into an uncertain future. Change occurred more quickly than we might have liked or expected, but undoubtedly it has been for the better. We now seem to be emerging from the worst of the pandemic and entering a new era. This is a 'new normal' for clients, for employees, for fund investors, for fund managers and for the jurisdiction. Technology, talent management and digitisation lie at the heart of this new normality. The paperless office At Genesis, we took the fortuitous decision in early 2018 to create a paperless office. We did not have a crystal ball to help us foresee the events of 2020/21, which included the sudden and unfortunate Covid-19 lock-down mandate. We did, however, see that digital technology was evolving and pushing our processes – and the industry as a whole – towards more digitisation. We had to satisfy the demands of our clients and fund investors (especially institutional investors) for more advanced technological reporting, communication and management of their business data.
uring the past two years of this Covid pandemic, all business operations have had to deal with change on a large scale. Even the world of fund administration has changed, and at Genesis Fund Services these changes have affected not only what we do but also the way we do it.
The retention of talent is also a top agenda item for the leaders of fund administrators. I remember, years ago, working outrageously long hours in fund administration – Sundays included. My employers expected this of me, but it is impossible for today's firms to expect the same; people will not come in on Sundays. Firms must now be more flexible and competitive. They must hold onto well-trained, experienced and talented people. They must, moreover, be able to attract and recruit talented professionals. Despite having experienced some staff attrition, fund administrators have had many
Investment managers and investors in funds, moreover, have been insisting that their fund administrators ought to improve their reporting, data delivery and cyber-security continuously. Smaller fund administrators have found the piecemeal nature of their technological solutions burdensome. Covid has hastened their need for software connectivity, the better to improve results for clients. Technology is not only crucial for the provision of excellent service; it has become as essential as talented human capital. The need for fund administrators to provide collaborative business data through the use of technology has become standard. Their further technological collaboration with investment managers and fund administrators – with regards to both the safeguarding of clients' data and the provision of seamless services – is another part of the ‘new normal’. Investment managers have had to face similar burdensome movements in human resources and changes in technology and regulatory rules. As such, they have had to reassess their service providers to ensure that their talent, the quality of their services and the technology that they require have improved beyond pre-pandemic norms. Over the decade prior to the pandemic, ‘due diligence’ questionnaires for fund administrators were standard. The pandemic, however, caused a noticeable increase in questions to do with technology and due diligence, which covered, among other things, data protection, redundancy and cyber-security. Investment managers and institutional investors have also intentionally asked more questions about corporate governance, diversity, equity and inclusion. It is now normal for fund administrators to provide dynamic governance, diversity and technological platforms. Corporate culture Although technology and human capital are of prime concern for a good fund services organisation, it must have a good corporate culture that can knit the two together. An intentional drive to formulate and implement plans to ensure that we have a cohesive team has been crucial for us during Covid. The demand for talks and seminars on communication, mental health and mindfulness, or other subjects to do with the development of the whole person, has outweighed the demand for more accounting or compliance training by far. People want to work with others they like or admire, or with people who can help their careers. The creation of a new 'conscientious culture' during and after Covid has become as important as the development of efficient accounting or 'due diligence' processes. At the same time, the maintenance and progression of a vibrant corporate culture has been one of the most difficult aspects of business in this pandemic. Collaboration among leaders and coaching in the workplace will continue to be an important aspect of the future work environment. All highly functioning organisations have, or should have, continual plans to improve their corporate culture. After the pandemic, The Bahamas will continue to be an important jurisdiction for investment funds. There is a high buzz about crypto-investing in our jurisdiction and the government has recently issued a White Paper on the future of digital assets; it is evident that crypto-funds as an asset class represent the future. Globally, investment by institutional investors in the crypto-fund arena is relatively small but many fund managers are starting to consider some investment there, either directly in various crypto-currencies or through such other means as crypto-derivatives, crypto-firms or crypto-ETFs, i.e. exchange-traded funds.
Fund admin and the impact of the pandemic
Technology has become as essential as talented human capital
Antoine Bastian is the CEO of Genesis Fund Services Ltd. He can be reached on +1 242 502 7020 or at abastian@genesisfundservices.com
Fund administration and the impact of the pandemic
changed, and at Genesis Fund Services these changes have affected not only what we do but also the way we do it. Before the pandemic, we all tended to view change as inevitable. However, the general pace of change in our industry was moderate until Covid arrived. That pace then accelerated enormously and catapulted us into an uncertain future. Change occurred more quickly than we might have liked or expected, but undoubtedly it has been for the better. We now seem to be emerging from the worst of the pandemic and entering a new era. This is a 'new normal' for clients, for employees, for fund investors, for fund managers and for the jurisdiction. Technology, talent management and digitisation lie at the heart of this new normality. The paperless office At Genesis, we took the fortuitous decision in early 2018 to create a paperless office. We did not have a crystal ball to help us foresee the events of 2020/21, which included the sudden and unfortunate Covid-19 lock-down mandate. We did, however, see that digital technology was evolving and pushing our processes – and the industry as a whole – towards more digitisation. We had to satisfy the demands of our clients and fund investors (especially institutional investors) for more advanced technological reporting, communication and management of their business data.
Fund administration’s age-old reliance on manual processes and high volumes of paper was near death. Fortunately, before the pandemic struck, we reduced our paper processes and all remaining manual processes dramatically. Covid simply hastened and obliterated any vestiges of paper processes that were left because manual applications simply could not happen when everybody was working from home. The fund administration industry, and we here at Genesis, therefore adapted to the 'new normal' of paperless processing. We did this with subscriptions, redemptions, accounting and, most importantly, the review and collection of 'due diligence' data. Without the advent of Covid, we would simply not have collected, vetted and processed 'due diligence' information from home as soon as we did. Before Covid, Genesis would never have permitted its employees, even its most capable and trusted employees, to have taken customers' passports, bank details and other information into their homes because of the need for privacy and accountability. A steep learning curve However, to continue operations effectively and to satisfy regulatory responsibility while keeping up best practices, we had to work quickly to improve and monitor our cyber-security data-protection – fund administration’s newest cost centre. We had never anticipated a time when 100% of the workforce had to work at home, and the firm therefore had to take on the unbudgeted costs of buying everyone a new laptop, a second screen and an updated wifi device to speed up their work. The advent of intense training in cyber-security and updates to controls that safeguard clients' information have led to major improvements and benefits at financial service providers. Now, employees who are not in the compliance department have to discharge responsibilities for 'due diligence' when they are at home and must be conscious of the need to safeguard clients’ information and mitigate the risks involved in that work. This they now do very well.
The use of two- and three-factor authentication has become the norm. Firms are far more aware of their duty to safeguard clients' data and have overwhelmingly improved the ways in which they mitigate risks that pertain to individuals during the pandemic. Videos, memos and virtual meetings regarding privacy and risk have increased tenfold... or at least, it feels like tenfold! At Genesis, we have observed that Covid has made all staff more conscious of the risks that cyber-maladies pose. It has also made them realise that it is their regulatory – and laborious – duty to safeguard clients' data. Balancing between work and life Many fund administration staff have worked arduously and conscientiously at home. Buckling under the stress of working all hours in a domestic setting, logging on in the middle of the night and answering emails at ungodly hours, they want to take some time off and not be overwhelmed by their new virtual world. In short, they need help and the senior management team has to make it available to them. Because of this, the issue of everyone's work/life balance has become a key issue at every meeting with the senior management team. During the past two years of dreadful lockdowns, isolation and the need to work from home have changed the way in which so many of our colleagues view the work experience. Some of them have seen their parents and other family members succumb to the vicious disease or suffer grave illness from it. Many have changed careers and residency or moved to different firms in the same sector. Human capital has moved around in an unpredictable and somewhat disruptive way. The retention of talent is also a top agenda item for the leaders of fund administrators. I remember, years ago, working outrageously long hours in fund administration – Sundays included. My employers expected this of me, but it is impossible for today's firms to expect the same; people will not come in on Sundays. Firms must now be more flexible and competitive. They must hold onto well-trained, experienced and talented people. They must, moreover, be able to attract and recruit talented professionals. Despite having experienced some staff attrition, fund administrators have had many opportunities recently to hire eager, talented professionals from all over the globe and from career paths outside the world of financial services. When considering human resources, fund administrators no longer want to employ mechanically minded people to perform robotic functions. They would rather invest in versatile, problem-solving individuals who can work with various aspects of the business. Although the cost of recruiting, retraining and developing professionals has increased, firms have now fast-tracked these elements of the work experience and are using creative means to do so. When Covid disappears, the result at every firm will be a well-trained staff, a greater capacity for work and a better experience for clients. During this period of Covid, fund administrators have been working hard to improve their technology. A few years ago, any one of them would have been served adequately by one system that handled accounting and its relationships with investors, one for corporate and compliance matters and perhaps another for other aspects of the business. However, although fees have gone down for services over the past ten years, the cost of providing straight-through processing (STP) safely and efficiently has sky-rocketed along with the cost of both hardware and software.
The government has recently issued a White Paper on the future of digital assets
The Coronavirus has caused immense disruption to business throughout the financial services industry, both in The Bahamas and abroad. Some fund administrators, however, have taken it in their stride. This is the story of one business that benefited from early updates to its practices in ways that it could not envisage before the virus struck, says Antoine Bastian of Genesis Fund Services
The Bahamas’ regulated 'SMART' and 'Professional' fund classes are primed for the exploration of these new and exciting, but very real, structures. Investment managers or institutions that are trying to figure it out can use the SMART fund model to gain crypto-exposure. Bahamian Professional Funds have no limitation on types of assets and can also be used as vehicles for crypto-asset exposure. Whether in crypto-funds, private equity funds or hedge funds, the 'new normal' has positioned Genesis to be even more capable of providing fund-administration services of high quality in the world after Covid than it was before. Our base in the Bahamas has helped us retain and recruit highly talented staff. It has also been crucial for the creation of our fast and reliable technological platform.
The general pace of change in our industry was moderate until Covid arrived
The use of two- and three-factor authentication has become the norm. Firms are far more aware of their duty to safeguard clients' data and have overwhelmingly improved the ways in which they mitigate risks that pertain to individuals during the pandemic. Videos, memos and virtual meetings regarding privacy and risk have increased tenfold... or at least, it feels like tenfold! At Genesis, we have observed that Covid has made all staff more conscious of the risks that cyber-maladies pose. It has also made them realise that it is their regulatory – and laborious – duty to safeguard clients' data. Balancing between work and life Many fund administration staff have worked arduously and conscientiously at home. Buckling under the stress of working all hours in a domestic setting, logging on in the middle of the night and answering emails at ungodly hours, they want to take some time off and not be overwhelmed by their new virtual world. In short, they need help and the senior management team has to make it available to them. Because of this, the issue of everyone's work/life balance has become a key issue at every meeting with the senior management team. During the past two years of dreadful lockdowns, isolation and the need to work from home have changed the way in which so many of our colleagues view the work experience. Some of them have seen their parents and other family members succumb to the vicious disease or suffer grave illness from it. Many have changed careers and residency or moved to different firms in the same sector. Human capital has moved around in an unpredictable and somewhat disruptive way.
many opportunities recently to hire eager, talented professionals from all over the globe and from career paths outside the world of financial services. When considering human resources, fund administrators no longer want to employ mechanically minded people to perform robotic functions. They would rather invest in versatile, problem-solving individuals who can work with various aspects of the business. Although the cost of recruiting, retraining and developing professionals has increased, firms have now fast-tracked these elements of the work experience and are using creative means to do so. When Covid disappears, the result at every firm will be a well-trained staff, a greater capacity for work and a better experience for clients. During this period of Covid, fund administrators have been working hard to improve their technology. A few years ago, any one of them would have been served adequately by one system that handled accounting and its relationships with investors, one for corporate and compliance matters and perhaps another for other aspects of the business. However, although fees have gone down for services over the past ten years, the cost of providing straight-through processing (STP) safely and efficiently has sky-rocketed along with the cost of both hardware and software.
I
Many people consider the only necessary document in the organisation of their estate to be the creation of wills. While this is a prudent step, a will is effective from the date of death until the estate is wound up. To address any period where a person’s wishes cannot be effectively obtained, other documents are necessary. In particular, consideration should be given to the creation of powers of attorney, enduring powers of attorney and heath care, or personal welfare, declarations as a part of proper estate planning. With its foundation in the law of agency, a power of attorney gives a person appointed by its terms authority to deal with the financial and business affairs of another. Such power of attorney could be used to complete a business transaction or other financial matters in circumstances where a person is prevented from attending to the transaction or matter personally. A power of attorney can be granted generally or limited to a specific transaction or time frame. A power of attorney, in its original format and usage, is terminated by any period of mental incapacity of the donor, including but not limited to mental disorders, dementia and Alzheimer’s disease. “An enduring power of attorney, created by the Powers of Attorney Act, Chapter 81, Statute Law of The Bahamas (the ‘Act’), makes it possible for a power of attorney to remain in existence and valid after a person has become mentally incapacitated. The use of powers of attorney and enduring powers of attorney permit the financial and business affairs of a person to continue uninterrupted during periods of absence, confinement, quarantine, or incapability and enables the donee of the power to act on behalf of such person. A health care or personal welfare declaration enables a person to convey her wishes and desires regarding medical treatment, the extent of any medical intervention and her personal care. Faced with periods of confinement, quarantine or inability, whether as a result of health concerns, restricted movement or otherwise, these additional documents can enable the plans and aspirations of the donor to be discerned and fulfilled.”
n the wake of the uncertainty generated by the pandemic, many have taken greater interest in obtaining certainty in other aspects of life. In particular, some have made it a priority to organise their affairs, take steps to ensure their wishes are documented and can be effected if necessary.
Sharmon Y. Ingraham is a partner in H&J’s Private Client and Wealth Management practice group Sharmon can be reached on +1 242 502 7020 or at singraham@higgsjohnson.com
Estate planning: Certainty in uncertain times
Organising your estate can give certainty in at least one area of your life, says Higgs & Johnson Partner Sharmon Ingraham, who explains the process of creating powers of attorney
Health care and personal welfare declaration Many persons consider it unthinkable and/or inhumane to be placed on machines or other treatment methods to sustain bodily functions where there is no detectable brain function. Others prefer that every medical resource available should be pursued to sustain life for as long as possible. In order to assist family members to determine a person’s position with regard to such treatment, a health care and personal welfare statement or declaration could be helpful. In some jurisdictions such documents are termed ‘living wills’ or ‘advanced directives’ and are supported by legislation enacted for that purpose. At present, in The Bahamas there is no legislation that specifically addresses or permits the creation of such instruments. However, the creation of a declaration of a person’s wishes may be made in accordance with the Oaths Act, Chapter 60, Statute law of The Bahamas to help to avoid family uncertainty and conflict. In creating a health care declaration, one may derive guidance from decisions of the courts in the UK. In considering the issue of such instruments regarding medical treatment, the English Court of Appeal in In Re T. (Adult: Refusal of Treatment) [1993] Fam 95, per Lord Donaldson of Lymington M.R., held:
In addition to the provisions of the Act, the Powers of Attorney Rules, established pursuant to the Act, mandates conditions for the valid and effective execution of enduring powers of attorney. To ensure the validity of an enduring power of attorney created in accordance with the Act, the instrument must, with certain permissible deletions and adaptions provided for in the Act and its accompanying rules, be in the prescribed form under the legislation. To the extent the instrument creating the enduring power of attorney purports to exclude any required provision of the Act or its rules, the instrument would be invalid as an enduring power of attorney under the statute. In that event, if such instrument becomes necessary upon a person becoming mentally incapacitated, the invalid document would be ineffective. The Act and its rules also require that the instrument be signed by both the person appointing another to deal with her financial and business affairs and the person being appointed. The duly executed and properly witnessed instrument must also be lodged at the Supreme Court Registry. After the enduring power of attorney has been fully executed and lodged with the Supreme Court Registry, it may be properly relied upon and utilised by the person(s) appointed to deal with the financial and business affairs of the appointor. Where, however, there are health care and personal care decisions to be made, or will likely need to be made, a power of attorney or an enduring power of attorney is inapplicable. Under section 2 of the Act, mental incapacity is defined as meaning in relation to the “person that the person is incapable … of managing and administering his property and affairs”. On that basis, considering the definition of “mental incapacity”, the scope of the authority derived from an enduring power of attorney thereunder would be limited to property, business and financial matters. The authors of Butterworths Wills, Probate & Administration Service (issue 119, June 2021) note at paragraph 2.3 that the English Court of Protection has deleted from enduring powers of attorney provisions directed at health care or personal care matters. Accordingly, where it is desirable to convey wishes or instructions for medical or health care decisions or other personal matters, such wishes or instructions ought to be set out in a statement declaring the person’s directions.
An Enduring Power of Attorney Section 4 of the Act, which introduced enduring powers of attorney into the law of The Bahamas, provides: “(1) The authority of a donee given by an instrument creating a power of attorney that –
is not terminated by reason only of the subsequent mental incapacity of the donor that would, but for this Act, terminate the authority.”
Provides that the authority is to continue notwithstanding any mental incapacity of the donor; and Is signed by the donor and a witness to the signature of the donor, other than the donee or the spouse of the donee,
• •
The Supreme Court, Nassau, Bahamas
“… An adult patient who, like Miss T., suffers from no mental incapacity has an absolute right to choose whether to consent to medical treatment, to refuse it or to choose one rather than another of the treatments being offered. … This right of choice is not limited to decisions which others might regard as sensible. It exists notwithstanding that the reasons for making the choice are rational, irrational, unknown or even non-existent …”
In another English case, Re C (adult: refusal of medical treatment) [1994] 1 All ER 819, it was held that the court, exercising its inherent jurisdiction, may via injunction or declaration rule that an individual was capable of refusing or consenting to medical treatment, and that could include future medical treatment. Finally, Mr. Justice Munby in HE v A Hospital NHS Trust and another [2003] EWHC 1017 (Fam) summarised the law at paragraph 46 thereof:
“… I can summarise the law as follows:
• • • • • • •
There are no formal requirements for a valid advance directive. An advance directive need not be either in or evidenced in writing. An advance directive may be oral or in writing. There are no formal requirements for the revocation of an advanced directive. … An advance directive is inherently revocable. Any condition in an advance directive purporting to make it irrevocable … and any provision in an advance directive purporting to impose formal or other conditions upon its revocation, is contrary to public policy and void. … The existence and continuing validity and applicability of an advance directive is a question of fact. Whether an advance directive has been revoked or has for some other reason ceased to be operative is a question of fact. The burden of proof is on those who seek to establish the existence and continuing validity and applicability of an advance directive. Where life is at stake the evidence must be scrutinised with especial care. Clear and convincing proof is required… If there is doubt that doubt falls to be resolved in favour of the preservation of life.”
“In light of the above, it is clear that it is permissible to designate, in some form, directions for medical and health care as well as personal care. For certainty and ease of reference, it is advisable that the authorisation regarding medical, healthcare and personal care matters be addressed in writing which can be produced and consulted as necessary. There is at present, no reported Bahamian case law on the issue; so it remains to be determined what guidance the court would give in the circumstances. However, setting out in an official document a person’s wishes, instructions and directions for medical treatment and the scope of treatment to be administered when such instructions cannot be verbally communicated would provide guidance to family members and medical professionals when determining a treatment plan. Where the declaration addresses personal care, the wishes of the person for matters like living arrangement, home care versus residential institutions, would assist in avoiding family conflict as to where grandma should live.”
Good estate planning addressing the avoidance of issues in the event of a prolonged absence, an inability to move freely or difficulty in communicating can be achieved through the creation of a will, an enduring power of attorney and a health care and personal care declaration. The combination of these documents would ensure that a person’s wishes and directions are clearly discerned and effected during any periods of incapacity, whether physical or mental. The existence of such estate planning documents can also avoid family conflict and discord. The use of a combination of these essential planning documents can give persons comfort and certainty in the midst of an uncertain and unsettling time.
Higgs and Johnson Partner N. Leroy Smith expands on the firm's 'One Team philosophy' and discusses recent legal developments that have affected the country's wealth management landscape
