The Government has moved to empower the Compliance Commission to conduct on-site examinations of financial institutions to ensure they are in conformity with the law.

In cases where the Commission is unable to conduct such examinations, an auditor will be appointed, at the expense of the financial institution, to conduct probes and report to the Commission.

Such provisions are under the Financial Transactions Reporting Act, which was among the nine bills passed in the House of Assembly on Wednesday, January 17, with amendments.

“This amendment would empower the Commission itself to determine the frequency of such on-site inspections,” said Attorney General and Minister of Legal Affairs the Hon Allyson Maynard-Gibson during the parliamentary debate.

“The Commission is fully aware of which financial institutions have stringent ‘Know Your Customer (KYC)’ procedures in place and which of them rigorously adhere to the same,” she said. “Likewise, the Commission also knows which of the licensees are in need of closer monitoring.”

Amendments to the following measures were also passed. They are the Financial and Corporate Service Providers Act, the Banks and Trust Companies Regulations Act, the Investment Funds Act, the Central Bank of the Bahamas Act, the Insurance Act, the External Insurance Act, the Lotteries and Gaming Act, the Proceeds of Crime Act, the Securities Industry Act.

In 2000, The Bahamas introduced a package of legislation that was intended to strengthen the country’s financial services sector.

Also created were Regulators mandated with the task of supervising the sector. They include:

o The Central Bank of the Bahamas
o The Registrar of Companies
o The Compliance Commission
o The Securities Commission, which replaced the Securities Board;
o The Inspector of Financial and Corporate Services, formed under the Financial and Corporate Services Act
o The Registrar of Insurance; and,
o The Gaming Board

With the introduction of the financial services legislation in 2000, the Central Bank in its annual report that year anticipated spending about $2.7 million in expanding its supervisory and regulatory functions.

“However, when considering what has in fact been expended by the Central Bank, combined with that spent by the Compliance Commission the Inspector and other regulators, the Government of The Bahamas has expended in excess of $40 million to date,” Mrs Maynard-Gibson said.

As a result of these complaints the Government responded by establishing the Financial Services Regulatory Reform (FSRR) Commission, which is mandated to examine and review the options for consolidating the present regulatory framework of the Financial Services Sector.

On May 8, 2006, the FSRR Commission recommended that certain steps be taken by the Government to streamline the regulation and supervision of the industry.

“One of the recommendations was that the various Acts governing the industry’s regulators be revised to “clarify the position on regulatory cooperation amongst domestic regulators, particularly to facilitate consolidated supervision and prevent regulatory arbitrage,” said Mrs Maynard-Gibson.

“It is ironic that the legislation passed in 2000 allowed regulators within the Bahamas to co-operate and exchange information with foreign counterparts, but did not allow for regulators in the same jurisdiction to share information amongst themselves to the same extent,” she added.