Higgs & Johnson, the largest law firm in the Bahamas, has expanded its partnership with the promotion of a corporate and regulatory lawyer. The new partner, Paul Davis, advises clients in a wide range of areas including financial services, trusts, foundations, and regulatory compliance. The UK-educated lawyer began practicing law at Higgs & Johnson in 2008, and has spent much of the intervening time working for the Rhône group, an international trust and fiduciary services consortium. Davis, who is based in the firm's Ocean Center office, ascends to the partnership at a juncture marked by radical changes to reporting standards to which Bahamas-registered companies and trusts are subject.
In an exclusive interview with IFLR1000, Davis analyzed why developments on the regulatory front will have a far-reaching impact on wealth management services. In Davis’s view, the OECD Convention on Mutual Administrative Assistance in Tax Matters (OECD Convention), and in particular the Common Reporting Standard (CRS), represent by far the most significant recent development for the management of information.
“Like FATCA, the implementation of the CRS will result in the automatic exchange of financial information between participating jurisdictions and as such, this is one thing everybody has their eye on, in terms of what information is going to be exchanged with whom, and on what basis. FATCA itself represented a fundamental change in the process of reporting but the future, with the advent of the CRS, holds even more significant changes,” Davis commented.
“At present, the provision of financial information by The Bahamas to partner jurisdictions has been based on Tax Information Exchange Agreements (TIEAs), with information provided upon request, but there are a number of requirements which must be satisfied by a partner jurisdiction before a request will be granted. In the future, with the CRS, information will not just be exchanged upon request, but automatically,” he added.
Davis characterizes these developments as a fundamental shift. The changes will go into effect in 2018, based on financial information from the prior year.
“If individual clients aren’t at least talking about it, they’re taking the head-in-the-sand approach. To the extent that they have undeclared funds, they may find that many well-advised professional fiduciary service providers are not accepting undeclared clients,” Davis said.
Of course, governments must choose individually whether to adopt the OECD initiatives. But Davis views the Bahamas as a forward-thinking jurisdiction. Hence the Bahamas has agreed to implement the CRS through bilateral agreements with appropriate partner jurisdictions.
“If a jurisdiction chooses not to be involved with these initiatives, they’re going to be on an OECD blacklist, and that is certainly damaging to the financial services industry of that jurisdiction. Most jurisdictions will likely comply to some extent,” Davis said.