Banking Law in the Bahamas

Introduction

A Trust Company is a corporation authorized to act as a trustee, fiduciary or agent for individuals or firms in a variety of capacities, such as administering trust funds (including their investment), executing wills, or acting as custodian for property held in trust. Trust companies are defined in two types: resident in which the company only deals with residents within the company and nonresident where this company deals with residents oversees. In The Bahamas trust companies deal with mostly nonresidential in the United States, the UK, Switzerland, and the Middle East. Banks which conduct business solely with non-residents are designated non-resident for exchange control purposes and are not allowed to offer services to residents without the approval of the Central Bank, thus enabling a clear differentiation between the domestic and offshore sectors, and ensuring effective conduct of domestic monetary policy.

Trust company are by case law a "bank" but in the normal sense since they do not take deposits or make loans and which may or may not be affiliated with a bank unlike commercial banks, but they can hold money in trust for clients to enable settlement of local expenses and fees.

Om the 29th of December 2000 the Government enacted nine new laws on the financial sector that affected Trust Companies by improving the system by deterring money laundering and other criminal activity. The new laws include:

- The Banks and Trust Companies Regulation Act, 2000

- The Central Bank of The Bahamas Act, 2000

- The Financial Intelligence Unit Act, 2000

- The Proceeds of Crime Act, 2000

- The Financial and Corporate Service Providers Act, 2000

- The Financial Transactions Reporting Act, 2000

- The International Business Companies Act, 2000

- The Evidence (Proceedings in other Jurisdictions) Act, 2000

- Criminal Justice (International Cooperation) Act, 2000

An Authorised Dealer is a bank which has been...