Attempts by foreign tax authorities to penetrate the Bahamas banking system has resulted in government action that is just the opposite of what the foreigners wanted: a tightening of secrecy laws to protect people using the Bahamas as a tax haven.
The move, in the form of an amendment to the 15- year-old Banks and Trust Companies Act, is intended to plug up possible loopholes in the law governing the disclosure of information about banks, trust companies, or their customers, many of them multinational corporations.
Although Bahamian courts have always upheld the principle of bank secrecy, a Supreme Court ruling late last year suggested that the existing legislation was subject to different interpretations. The changes are intended to eliminate any ambiguity.
Extending beyond the scope of normal banker-client confidentiality, the new legislation binds all directors, officers, employees, and agents of any financial institution ever licensed in the Bahamas, together with its attorneys, consultants, auditors, accountants, receivers, liquidators, and their employees from disclosing any information relating either to the institution or its customers and their accounts.
The law also covers the inspector of banks as well as personnel of the Central Bank of the Bahamas, including attorneys, consultants, auditors, and their employees.
Secrecy is considered a key element in maintaining the Bahamas' status as the world's leading offshore financial center. Breach of the code, except by order of a Bahamian court, could result in a $15,000 fine and/or two years imprisonment.