Banking & Finance Country Comparative Guide

• Published date: 10 March 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Capital Adequacy/BASEL, Financial Services, Corporate and Company Law, Corporate Governance
• Law Firm: Lennox Paton
• Author: Dwayne Whylly

This country-specific Q&A provides an overview of Banking & Finance laws and regulations applicable in The Bahamas. This article was first published in The Legal 500: Banking & Finance Country Comparative Guide 2021.

Banking & Finance (Bahamas) Q&A

1. What are the national authorities for banking regulation, supervision and resolution in your jurisdiction?

Banking business in the Commonwealth of The Bahamas ("The Bahamas") is primarily governed by the Central Bank of The Bahamas ("CBB") pursuant to the Banks and Trust Companies Regulations Act 2020 ("BTCRA").

Banks are also subject to regulation by the Financial Intelligence Unit ("FIU") with respect to anti-money laundering and the countering of financial terrorism.

2. Which type of activities trigger the requirement of a banking licence?

The requirement to obtain a banking licence is triggered by an entity engaging in the business of:

1. accepting deposits of money which may be withdrawn or repaid on demand or after a fixed period or after notice and employing those deposits in whole or in part by lending or otherwise investing them for the account and at the risk of the person accepting them (banking business) or
2. accepting cash, cheques, other monetary instruments or other stores of value in one location and the payment of a corresponding sum in cash or other form to a beneficiary in another location by means of a communication message, transfer or through a clearing network to which the money transfer business belongs (money transmission business).

3. Does your regulatory regime know different licenses for different banking services?

Yes, banking licensees may be designated as:

• Resident - designates that the licensee may provide services to persons designated resident for exchange control purposes.
• Non-resident - designates that the licensee may only provide services to persons designated non-resident for exchange control purposes.
• Unrestricted - designates that the licensee is unrestricted in the clients it can take on subject to residency restrictions.
• Restricted - designates that the licensee may only take on as clients those specifically authorised by the CBB. It should be noted that, as a matter of policy, the CBB has decided to discontinue the issuance of restricted banking licences.

Additionally, a resident licensee may be designated as an Authorised Dealer capable of dealing in gold and all currencies and, for this purpose, can open and maintain accounts in such currencies subject to the limits set by the CBB.

4. Does a banking license automatically permit certain other activities, e.g., broker dealer activities, payment services, issuance of e-money?

No, in order to deal in, arrange deals in, advise on or manage securities ('securities business') in or from within The Bahamas, a bank is required to be licenced by the Securities Commission of The Bahamas ("SCB") under the Securities Industry Act 2011 ("SIA").

5. Is there a "sandbox" or "license light" for specific activities?

There is not a "sandbox" or "license light" in respect of certain banking activities. However, the CBB does tailor the restrictions, if any, placed on a licence to the circumstances surrounding a licensee. In this regard, the CBB may licence a licensee with similar restrictions as a "sandbox" or "license light".

6. Are there specific restrictions with respect to the issuance or custody of crypto currencies, such as a regulatory or voluntary moratorium?

There is currently no moratorium in place on the issuance or custody of crypto currencies under the relevant legislation governing the issue and custody of crypto currencies.

7. What is the general application process for bank licenses and what is the average timing?

The Application takes the form of a letter containing...