Financial services in the Bahamas: banks, trusts, funds and regulators

Two quite different financial industries share the same few streets of downtown Nassau. The first serves people who live here: payroll accounts, car loans, mortgages and home insurance, nearly all of it in Bahamian dollars. The second serves clients who may never set foot in the country: families with trusts, investment funds, international companies and insurers, nearly all of it in US dollars or other foreign currencies. Some institutions do both, sometimes in the same building.

Most confusion about "offshore banking" in the Bahamas comes from mixing those two up. This guide separates them, explains what each kind of institution does, and sets out which regulator watches over which part. It is general information, not financial, legal or tax advice. If you are making a decision that involves real money, talk to a licensed professional and check the details with the regulator concerned.

Two sectors, divided by residence

The dividing line is residence. Under the country's exchange control rules, administered by the Central Bank of The Bahamas, Bahamian residents deal mainly in Bahamian dollars, and moving money into foreign currency is controlled. Non-residents deal in foreign currency and are largely outside those limits. That single distinction explains why a Nassau resident and an overseas client of the same bank can have such different experiences.

The domestic sector is the part residents see: commercial banks with branches and cash machines, credit unions, insurance companies and agents, money transfer counters and payment apps. It finances houses, cars and small businesses, and it holds the savings of Bahamian households.

The international sector is mostly invisible from the street. It includes banks and trust companies serving non-resident clients, fund administrators, investment managers, corporate service providers that form and manage companies, and insurers that cover risks outside the country. It earns fees, employs a professional workforce of accountants, attorneys and compliance staff, and pays licence fees and taxes that help fund the government.

Together, these businesses are usually described as the second pillar of the economy after tourism. They cannot replace visitor spending, but they spread the risk.

Banks and trust companies

The Central Bank licenses every bank and trust company that operates in or from within the Bahamas. Some licences allow a business to deal with the public; others are restricted to a defined group of clients. The Central Bank sets capital and liquidity standards, inspects licensees and can take action when one falls short.

For residents, the important protection is deposit insurance. The Deposit Insurance Corporation, set up under the Protection of Depositors Act 1999 and managed by the Central Bank, covers Bahamian-dollar deposits at member institutions up to B$50,000 per depositor at each institution. Foreign-currency deposits are not covered by that scheme, which is worth knowing if you hold a US-dollar account.

Trust companies are the heart of the private wealth business. A trust is an arrangement in which a trustee holds assets for the benefit of others, often members of one family across several generations. Bahamian trust companies act as professional trustees, keep the records and make distributions according to the trust deed. Wealthy families sometimes set up a private trust company that acts only for their own trusts. The Bahamas also allows foundations, a structure familiar to clients from civil-law countries.

The Central Bank's reach goes beyond banks. It also supervises credit unions, money transmission businesses and payment service providers, which matters to anyone who pays bills through an app or sends money home through a transfer counter rather than a bank branch. It also issues the Sand Dollar, the digital form of the Bahamian dollar launched nationally in 2020.

Funds, securities and corporate services

The Securities Commission of The Bahamas, established in 1995, regulates the investment side. Its main laws are:

• The Securities Industry Act 2011, covering securities firms, brokers and advisers, public companies whose shares are offered to the public, and the market where they trade.
• The Investment Funds Act 2019, which licenses investment funds and the administrators and managers who run them. Funds come in several classes, including standard funds open to the public, professional funds for sophisticated investors and SMART funds built for specific, narrower uses.
• The Financial and Corporate Service Providers Act 2020, covering the firms that form international companies, act as registered agents, provide registered offices and handle corporate paperwork for overseas clients.
• The Digital Assets and Registered Exchanges Act 2024, which governs businesses dealing in crypto-assets and other digital assets.

Corporate service providers matter more than their low profile suggests. They are the gatekeepers who decide whether to take on a client and form a company. Under the Register of Beneficial Ownership Act 2018, registered agents must hold records of who ultimately owns and controls the entities they look after, on a secure government platform that the authorities can search.

Insurance

The Insurance Commission of The Bahamas, established in July 2009, is both the prudential regulator, checking that insurers can pay their claims, and the conduct regulator, checking how products are sold. It administers the Insurance Act 2005 for domestic insurers and intermediaries, and the External Insurance Act 2009 for insurers that cover risks outside the country.

For households, the practical point is that insurance in the Bahamas must be sold through a registered intermediary, such as an agent or broker. If someone offers you a home, health or life policy, it is reasonable to ask for their registration and check it.

The anti-money-laundering layer

Every one of these businesses works under the Financial Transactions Reporting Act 2018. In plain terms, it requires financial institutions to verify who their customers are, understand where their money comes from, keep records and report suspicious transactions.

Two bodies sit behind that law without licensing banks themselves:

• The Compliance Commission supervises the professions and businesses that handle money without being financial institutions, known in the trade as designated non-financial businesses and professions. Its constituents include lawyers, accountants, real estate brokers, land developers and dealers in precious metals and stones when they carry out the activities the law specifies. They must register with the Commission and follow the same identification and record-keeping rules as a bank.
• The Financial Intelligence Unit, created under its own Act in 2000, receives and analyses suspicious transaction reports and passes intelligence to the police and to its counterparts abroad. It can also direct that a transaction be held up for a short period while it looks into a report.

That machinery was tested in public. In October 2018 the Financial Action Task Force, the international standard-setter on money laundering, placed the Bahamas on its list of jurisdictions under increased monitoring. After reforms, the Bahamas came off that list on 18 December 2020. From the lending side of the desk, the result is easy to see: Bahamian banks ask more questions, and want more documents, than many newcomers expect.

The regulators at a glance

Tax and transparency

The Bahamas has no personal income tax and no general corporate income tax, which is a large part of its appeal to international clients. That does not mean the system is opaque. The country exchanges financial account information with foreign tax authorities under the OECD's Common Reporting Standard and the US rules known as FATCA. The Commercial Entities (Substance Requirements) Act 2023 requires companies carrying on certain activities to have real operations in the country rather than a brass plate. And under the Domestic Minimum Top-Up Tax Act 2024, very large multinational groups are liable for a top-up tax in the Bahamas so that their effective rate reaches the 15 per cent global minimum agreed through the OECD.

For an ordinary resident, the tax picture is simpler. Value added tax, business licence tax, National Insurance, real property tax and customs duty do the work that income tax does elsewhere. Our guide to starting a small business in Nassau walks through how those apply to a new venture.

What it means for residents and newcomers

Opening an account takes time. Expect to provide identification, proof of address, references and, for larger sums, evidence of where the money came from. A personal account can take weeks; a business account often longer. Start early, and keep certified copies of your documents to hand. If you are relocating, our guide to moving to the Bahamas covers the residency side.

Check before you invest. Each regulator publishes information on the businesses it licenses or registers. If someone offers you an investment, a fund or a policy, look them up first. An unlicensed operator is not entitled to take your money, and you will have very little protection if something goes wrong.

Know which currency you are in. Deposit insurance covers Bahamian-dollar deposits, not foreign-currency ones. Resident accounts in foreign currency are subject to exchange control rules, and your bank will explain what applies.

Complain in the right order. Start with the institution's own complaints process and keep everything in writing. If that fails, the regulator responsible for that business is the next stop. The table above tells you which one.

How the pieces fit together

Financial services and tourism are linked more closely than they appear. Both bring in foreign currency, and both depend on the country's reputation abroad: one as a place to holiday, the other as a place to trust with money. Our explainer on how tourism shapes the Bahamian economy looks at the bigger of the two pillars. For the detail behind any of the laws above, the Securities Commission and the Central Bank publish their legislation, guidelines and licensee information online, and more of our practical business guides are collected in the business section.