April 2nd, 2013:
Good Afternoon,
The Ministry of Financial Services intensified its work programme on FATCA in January, 2013. In that month the Minister installed an advisory group of private sector individuals from across the Bahamian financial sector including – banks, trust companies and securities and insurance firms and advisors. These professionals provided great insight to the multi agency government team who were already assembled to work on FATCA.
The Ministry next began work on a FATCA strategy which included:
• an analysis of the affected financial institutions based on the FATCA regulations;
• the launch of a FATCA survey to assess readiness and anticipated costs of compliance for our sector;
• a review of the approaches for compliance in the Regulations, including both IGA models;
• a review of financial institutions and products that could be considered exempt under the FATCA regulations, including local financial institutions;
• and a review of the legislative changes that would be necessary to comply with FATCA.
As Minister Pinder mentioned, on 1st March of this year, the Ministry began its initial discussions with the US
Department of Treasury on FATCA. We found that the preparatory work of the FATCA advisory group proved very useful and our discussions with Treasury assisted in charting the Ministry’s future work and also led to the hosting of this regional workshop next week. One of our main aims was to ensure that our private sector would be included in such a workshop, so that they could be better informed about FATCA.
With respect to our next steps, the Ministry will complete its internal analysis on the appropriate approach for
The Bahamas – that is either:
• a Model 1 approach where the Government of The Bahamas, through the Ministry of Finance, serves as the conduit for the information from financial institutions before it is passed to the IRS; or
• the Model 2 approach which would require individual financial sector firms to enter into agreements to exchange the relevant information directly with the IRS.
The Ministry has noted that there are advantages and disadvantages to either approach and our decision will be guided entirely by what is in the best interest of The Bahamas.
The Ministry plans to complete its internal reviews within the next two months or so and to present a recommendation to Cabinet, taking into consideration the views of all stakeholders including the Ministry of Finance which serves as the Competent Authority for Tax Information Exchange Matters, the Office of the Attorney General of The Bahamas, the Regulators and the private sector.
After Cabinet approval, the Ministry of Financial Services would then be empowered to present a draft agreement to The United States so that negotiations may commence.
Thank You.
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