2000, Barbados pledged to make changes to its financial
supervisory regime in order to have its name removed
from an OECD blacklist.
government of Barbados is planning to establish a
Financial Services Authority, with the aim of enhancing
the supervision and regulation of the non-bank international
Lynette Eastmond, Minister of Commerce, Consumer Affairs
and Business Development, disclosed in February 2007
that the proposed authority would integrate regulators
of the Co-operatives Department, the Securities Exchange
Commission, the Business Development Unit of the Ministry
of Economic Affairs and Development and the Office
of the Supervisor of Insurance and Pensions.
minister revealed that “a variety of resources
would be at its (the Commission's) disposal to further
facilitate the growth and development of the financial
sector of Barbados."
In February, 2009, The
International Monetary Fund published a report on
the adherence of Barbados to the international standards
governing the prevention of money laundering and terrorist
report stated that: "Barbados has criminalized
money laundering (ML) broadly in compliance with international
standards. However, while the definition of unlawful
activity allows for a wide array of serious predicate
offenses, human trafficking, corruption and bribery
are not totally consistent with the requirements of
the Palermo Convention."
it observed that: "While the Financial Intelligence
Unit (FIU) carries out its functions competently,
it is hampered by a lack of resources. The law enforcement
authorities and the Office of Director of Public Prosecutions
are under-resourced in relation to their functions.
The competent authorities continue to engage in a
wide array of joint law enforcement initiatives."
and supervision of the financial sector is shared
among four regulatory authorities with varying supervisory
powers. Except for trust and company service providers
who are licensees of the CBB, there are no measures
to monitor and ensure compliance of DNFBPs with AML/CFT
requirements. While the Registrar of Companies maintains
a register with information on directors and registered
offices of companies, there is no legislative requirement
to disclose beneficial ownership information."
there are no secrecy laws inhibiting the implementation
of the FATF Recommendations, certain regulatory authorities
are limited in their ability to either share or access
information. Recordkeeping requirements are extensive
and generally observed. However, there is no requirement
in law or regulation for account files and business
correspondence to be retained for five years after
termination of the business relationship or for financial
institutions to ensure that records are available
on a timely basis to competent authorities."
November 2009, Minister of International Business
and International Transport, George Hutson revealed
that plans for the establishment of a Financial Services
Commission (FSC) in Barbados were on track.
FSC, will regulate the insurance subsector, the cooperative
sector, the Stock Exchange, and all non-banking financial
sectors in general.
careful and effective supervision and regulation of
international business and financial services activity
in Barbados constitutes a critical element of the
government's policy for the development and expansion
of this sector,” commented Hutson at the time.
ensuring the adequacy and soundness of its legal basis,
either through the revision of existing legislation
or the introduction of new ones, is fundamental to
the achievement of that objective," he added.
establishment of the FSC will help to regulate the
sector, and "certainly increase Barbados' presence
as a financial services domicile of good international
repute,” he explained.
legislation will need to be enacted and the dynamics
of the staffing and administrative matters determined.
We project that the FSC will be established by the
end of the second quarter of 2010," Hutson concluded.
Trusts in Barbados
are governed by English common law and by the Trustees
Act Cap 250 as amended, which deals with the powers
of trustees. Appeal is to the Privy Council. There
is no registration requirement or stamp duty; trustees
can be non-resident as long as one is resident. A
resident corporation acting as trustee must be licensed
under the Offshore Banking Act (see Offshore
Legal and Tax Regimes). Exchange controls apply
to local trusts.
The Hague Convention
has not been implemented; the maximum perpetuity period
is 100 years.
Local (domestic) trusts
are taxed as separate entities (see Domestic
Trusts Act 1995 introduced purpose trusts and asset
protection trusts, as well as strengthened protection
against forced heirship provisions, non-recognition
of foreign judgements, and protection against creditors.
Creditors have three years in which to set aside the
terms of a trust, but can only do so if they can establish
an intent to defraud. A successful creditor can only
set aside the terms of the trust in so far as he is
prejudiced - he can't overset the whole thing unless
that is necessary to satisfy him.
against perpetuities does not apply, and accumulation
of income is permitted for up to 100 years.
have considerable tax advantages (see Offshore
Legal and Tax Regimes) and are exempt from exchange
control; the following conditions must be fulfilled:
- the settlor must
be non-resident when the trust is created and at
subsequent times when property is added to the trust;
- trust property must
not include Barbadian real estate or an interest
- no beneficiary other
than a Barbadian offshore entity can be a resident
of Barbados at the time of creation of the trust,
or at the time of any subsequent addition of property
to the trust;
- at least one of the
trustees must be resident in Barbados.
beneficiaries can include Barbadian offshore entities
- this means an exempt insurance company, an offshore
bank, and an international business company. The Act
defines 'resident' to include: ordinarily resident
individuals, bodies, whether incorporated or not,
majority-owned by residents; and trust management
lays down specific confidentiality rules, protecting
the identity of settlor and beneficiaries, the workings
of the trustees, the reasons behind trustees' actions,
accounting information, etc. Confidentiality can only
be broken by the Court or at the request of a beneficiary.
has been a considerable activity in Barbados for 30
years or more, much of it conducted by the trust departments
of banks. The International Trusts Act 1995 gave Barbados
a modern, comprehensive, business-oriented trust regime
which has proven attractive, particularly to corporate
users. This new, wider market-place for trusts is
not necessarily interested so much just in tax avoidance,
but also in the efficient management of wealth in
a more general sense.
a sophisticated community of professional advisers
on trust matters in Barbados. Individuals can provide
trust services without registration, but companies
offering trust services must be licensed by the Central
Bank under the Offshore Banking Act 1979. Foreign
or Barbados-resident companies may obtain licenses.
Legal and Tax regimes for details of the taxation
of trusts in Barbados. Very tax-efficient structures
can be formed using offshore trusts in combination
with International Business Companies for international
first established an offshore banking sector under
the Offshore Banking Act 1979 as amended. The Act
provided for the licensing of offshore banks, and
contained a precise description of offshore banking.
The Offshore Banking Act was repealed and replaced
by the International Financial Services Act, 2003
which defines international financial service as
the business of:
Banking also includes the acceptance in trust of:
Amounts of money in foreign currencies, foreign
securities or both;
personal or movable properties; and/or
or immovable property outside Barbados from persons
resident outside Barbados.
qualify and obtain a license, an applicant must:
Obtain the consent of the Minister to incorporate
for the purpose of offshore banking. The government
imposes a flat annual license fee of US $12,500.
that it is an eligible company or a qualified foreign
State the names and addresses of its director
Submit a certified copy of its articles of incorporation;
Give particulars of the proposed banking activity
Submit the names of shareholders who are residents
of Barbados and the number of shares held by them.
Have at least one of the directors resident in Barbados.
capital requirement for residents and non-residents
of US $500,000 and US $125,000 respectively.
Minister of Economic Affairs, Trade, Industry and
Commerce, David Estwick said that proposals to introduce
a central regulatory body for the banking sector had
been given conditional approval from the cabinet and
would now be subject to an evaluation, hinting that
the regulatory board would be in place before the
end of 2009.
said that a regulatory body would become increasingly
necessary with the roll out of the CARICOM Single
Market and Economy, observing that increased movement
of capital across the region heightened the need for
CARICOM, there are provisions for cross-border trading
and cross-border movement of capital as we give credence
to the CSME, in particular, the rules of establishment
that allow for the free movement of capital. So, therefore,
this requires that we look very closely at the organisational
structure that we have in place to ensure that we
have a comprehensive, central, regulatory body.”
out that the financial sector is already subject to
adequate regulation, Estwick noted that further regulation
of the credit union movement would allow for greater
protection of members’ deposits.
want to look at a central entity that will be able
to deal with a lot of the non-traditional instruments
involved in investment and trading that may have caused
some of the problems that now exist within the United
States,” he explained.
we have to be very careful with the systems we put
in place under our central financial structure, we
must ensure the regulation will facilitate the new
instruments of investment and capitalisation,”