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Official Opening Welcome & Remarks
The Hon. L. Ryan Pinder, Minister of Financial Services
Introduction and FATCA Symposium
Good morning. I want to welcome all present today to this one day regional conference on “Complying with FATCA” hosted by the Bahamas Ministry of Financial Services in association with the Bahamas Association of Compliance Officers (BACO). I want to personally welcome to the Bahamas and to this regional symposium our special guest presenters from the United States, Danielle E. Rolfes, International Tax Counsel, US Department of Treasury; Michael Danilack, Deputy Commissioner (International), U.S. Internal Revenue Service and Tara N. Ferris, Attorney, Office of Chief Counsel (International), U.S. Internal Revenue Service and the rest of their team and representatives of the US State Department.
This I think is a first in the region, especially for the regional financial services industry, where the United States government technical experts engage not only the private sector here in the Bahamas, those from the region, but also on a multilateral, and later a bilateral basis with representatives from regional country governments and regulators. In this vein, I want to personally welcome all those attendees here today from throughout the region, both from the private sector and the public sector. We have representatives from at least 10 countries as part of this symposium. The participants here today extend beyond the CARICOM region, and into Central America, I want to congratulate you all and welcome you to the Bahamas.
I personally want to commend all of my Financial Services team in the Ministry of Financial Services, especially the leader of the team, my Director of Financial Services, Dr. Nicola Virgill-Rolle for such a spectacular job of organizing this symposium and coordinating all matters relating to the event. I also want to thank the Bahamas Association of Compliance Officers who know they have a special place with me, the Ministry of Financial Services and BACO partner regularly together, and I want to thank BACO, and especially the President Marsha Ferguson, and past president Cherise-Cox Nottage for their tireless dedication and work, along with the stellar team from the Bahamas Institute of Financial Services. Thank you. I need to extend gratitude to the United States Embassy here in Nassau, and particularly Mr. Alexander Sokoloff for the support and efforts to cause this Symposium to happen.
This Symposium came together quickly, but effectively. On March 1st, 2013, I led a delegation consisting of senior government officials from my Ministry and the Attorney General’s Office to Washington, DC for a meeting with officials from the US Department of Treasury and the Internal Revenue Service to discuss FATCA and related issues. It was at that meeting that The Bahamas and the US Treasury Department discussed how a workshop for the region would be beneficial to assist with better understanding the US legislation.
My Ministry pursued the matter further with the US Officials and presented a proposal for a regional workshop for FATCA at the recent CARIFORUM Financial Services Task Force meeting held in Bridgetown, Barbados on 7th March, 2013 sponsored by the Caribbean Export Development Agency (CEDA). The Taskforce was supportive of the regional conference and to facilitate broad participation in the FATCA workshop, CEDA agreed to host its second Financial Services Task Force meeting in conjunction with the FATCA workshop. CEDA also agreed to help facilitate the participation of the Financial Services Task Force Members at these meetings, ensure maximum regional participation. I want to personally thank the Caribbean Export Development Agency and their support from day one when I advanced the importance of financial services regionally, and their cooperation and support on very short notice for this Symposium. We could not have the regional success we have today without CEDA’s participation. I also want to express my gratitude to the Bank of Jamaica, Chairman of the FATCA Advisory Committee to CARICOM for its assistance in contacting regional Central Bank participants and coordinating their attendance.
FATCA was signed into US law in 2010 through the US Hiring Incentives to Restore Employment Act and has the effect of designating financial institutions around the world which receive US payments or deal with US clients as “Foreign Financial Institutions” (FFIs). Under FATCA, FFIs are required to register with the United States Internal Revenue Service (IRS) and to report certain account information to the IRS with respect to persons considered US persons for tax purposes. Failure to report this information either directly to the IRS or through the relevant government agency can result in a 30% withholding being applied to the institutions payments from United States sources. Some say FATCA might be the most significant international matter facing international financial services industry today.
We have hosted many FATCA conferences here in the Bahamas, some sponsored and organized through the Ministry of Financial Services, some organized by the Bahamas Financial Services Board, and some by the Eugene Dupuch Law School and other institutions. At each event you could sense a mood of intimidation and sense of being overwhelmed by the private sector. This is why it is so important to have the input and explanation from the US Treasury representatives and IRS representatives. We will ensure that all opportunity is given to provide the education and information on such an important issue.
We as an industry must be prepared to accept that what we are subject to under FATCA will only be the start of the new normal. The global paradigm is shifting to an expectation of transparency globally. We have been witnessing this evolution over the last 15 years from when legislative changes were made for anti money laundering purpose since the early 2000s, to the implementation of TIEAs, to the imposition of OECD and FATF recommendations, and now FATCA. We, however, have developed a significant level of local expertise, we must be committed to competing in this new normal, we can be industry leaders.
In the implementation of FATCA we all have certain responsibilities, both Government and Private Sector. We will hear today the responsibilities of both the private sector and of Government, how private sector is expected to prepare, and the options for Government with respect to intergovernmental agreements. Of equal importance, we will hear about how different products are treated for the purposes of FATCA, something that is clearly of interest to the private sector.
Preparation for FATCA
In February of this year in launching the Government’s 10 year strategy for Financial Services I emphasized the urgency in formulating a focused and defined plan to address the many aspects of FATCA and its applicability to our financial services industry. I called, as a part of the strategy, that we ensure that the Bahamas has a detailed strategy for ensuring that our center remains competitive in an environment with FATCA.
Recognizing FATCA and its implementation is a responsibility of both Government and private sector, we in the Ministry of Financial Services thought it wise, even before engaging the United States, to create a FATCA Task Force representative of some of the most progressive minds in the private sector of our financial services industry. This FATCA Advisory Group had the mandate to review FATCA requirements and make recommendations for research and ultimate discussion and negotiation on matters particularly sensitive and relevant to the financial services sector of the Bahamas. It was this FATCA advisory group of private sector representatives who would partner with my Ministry to prepare for the beginning of negotiations on FATCA. This FATCA Advisory Group prepared a strategy document for the Government to consider in its preparations.
This is a model that my ministry, the Ministry of Financial Service prides itself in, engagement at all levels with the private sector as Government policy is developed. I want to thank the private sector for effectively having a meaningful role in the preparation of the Government of the Bahamas for negotiations and discussions with the United States on FATCA. Having recognized the areas of FATCA that have particular relevance to our financial services industry, we are prepared to address them. We are thankful for the opportunity to have continued dialogue with US experts for FATCA on these matters. The ability for us as a region to gain valuable knowledge from the experts is a necessity, we as a region just don’t posses the expertise.
Limited Tax Capacity
In financial services, every country and market represented here today can claim a national interest, however, as discussed at the CARICOM Heads of State meeting in Haiti, capacity and preparation, or the lack thereof, is something that can be shared equally as a regional interest. Countries throughout the region, whether due to their individual size, the sophistication of the financial service industry, or both, have a limited capacity in tax, and especially US tax. For example, the Bahamas, who has a long standing history as a financial center, a country close to the United States, we can count the local tax experts on one hand. This lack of capacity is common in the industry, and technical assistance, both to the Government, and more importantly to the private sector is necessary to ensure adequate preparation and compliance.
The costs of compliance with FATCA, both to the Governments, and the private sector is a significant cause of concern throughout the entire region, with many not truly understanding the scope of what may be required. This includes costs of internal preparation for FATCA, and costs related to the educational needs. This is why a symposium like this is so importance, both to the private industry in the Bahamas, but also to participants from throughout the region. Government’s likewise are challenged with the obligations they will have under a regime such as FATCA. Some countries in the region are being forced to evaluate and make decisions, not necessarily in the best interest for its industry, but at times, based on what it can afford. This is a dangerous situation that small countries in the region are facing, an issue that as a region we must address collectively. We look forward to hearing from the experts what the expectations of industry and Government are.
Interaction with US Authorities
Before I conclude I want to speak to the regional government representatives and regulators that are here today. This regional symposium here in the Bahamas provides you with a unique opportunity from an educational and technical level, but provides a forum in which you can interact with the representatives from the US Treasury Department and IRS directly. We have organized a multilateral session with only Government and regulatory representatives, and reserved a full day tomorrow for you to have bilateral discussions and negotiations on matters related to FATCA for your respective countries. This is a very important element of this symposium, to allow for countries throughout the region to advance their national interests and concerns on a bilateral basis.
As I mentioned before, in financial services we each may have national interests, but there is commonality to have a regional interest as well. The multilateral interaction allows us to discuss our regional interests and the bilateral opportunities allow you to advance your respective national interests. The framework of this forum, and your involvement and interaction allows us to accomplish both goals, and I encourage all here today to take advantage of that opportunity.
In conclusion, I again want to extend gratitude for all parties involved in hosting this event, especially my Ministry of Financial Services team. I view this event as a historic event for financial services in the region, addressing a topic that is of utmost importance to the private sector and Governments. I recall last year when we had a regional financial services conference in Antigua there was much discussion on finding a regional interest in financial services that would overcome the extreme competitiveness of each country’s national interest. At that conference I remember making the point that it would require a issue that had significant effect on the industry, one where many countries had similar concerns, and the advancement of those concerns would be separate from respective national interests. I think in this conference we have done just that, we have caused for the region to come together to forward common interests.
To the private sector, especially those from the Bahamas. We have had many different types of forums on FATCA, with a variety of different private sector presenters. Today will be the culmination of our FATCA education campaign where for the first time we have the presence of senior technical experts from the Department of the Treasury and the IRS to speak to the way forward under FATCA, the expectations, and what is really required for implementation. Those matters of concern will likewise be addresses, matters that could affect the competitiveness of the industry, and what the approach and expectations of the US are. This is a great opportunity and I thank you for being here and investing in our industry.
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