Updated Legislation Clearly Defines Financial And Corporate Service Providers

• Published date: 02 February 2021
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Financial Services, Securities
• Law Firm: Bahamas Financial Services Board
• Author: Ms Christina Rolle

Nassau, The Bahamas, 29 January 2021 - The Financial and Corporate Service Providers Regulations gazetted in The Bahamas on 30 December 2020, along with the Financial and Corporate Service Providers Act (FCSP) approved on 4 November 2020, establish a modern, full regulatory, internationally compliant framework with the Securities Commission of The Bahamas as regulatory authority. The legislation updates the two-decades-old legal framework of the prevailing Act in three important areas:

• It provides legal clarity for both corporate and financial service providers;
• It provides much needed legal clarity to the non-bank financial services falling under its remit, in the process creating new entrepreneurial opportunities; and
• It has a significantly greater focus on customer protection and safeguarding the public than the previous Act.

Similar to the Digital Assets and Registered Exchanges Act, 2020 (DARE) which also received Parliamentary approval on 4 November, the SCB began its extensive engagement with the industry in 2016 to develop a modern framework for financial and corporate service providers that is in keeping with international best practices and standards. With 340 financial and corporate service provider licensees in The Bahamas, the legislation directly impacts Bahamian entrepreneurs, perhaps more than any other financial services legislation.

While the legislation covers corporate services activity, it also captures many of the non-bank financial services activities in which Bahamian entrepreneurs are engaged in but are not required to be licensed by the Central Bank of The Bahamas, nor registered under the Securities Industry Act, 2011, with the Commission.

The FCSP clearly defines the businesses and activities that require a person to be licensed as a financial or corporate service provider. Under the FCSP's activity-centric approach, each financial service will have specific rules tailored to the risks and other needs it represents.

Financial Services covered by the legislation include money lending, money broking, payday and cash advances, credit extension, bill paying services, debt collection, financial leasing, financial and advisory or consultancy services, financial intermediation services, trading in commodities and other financial instruments, custody of digital assets and wallet services providers.

Christina Rolle, SCB's Executive Director pointed out the significance of the custody of digital assets and wallet service providers...