The Government of the Bahamas has decided to try to shake the "offshore" tag and go head-to-head with European jurisdictions in the provision of financial services. The Bahamas has been among the most vocal of the Caribbean jurisdictions in the recent negotiations with the OECD and FATF, leading the accusations that the international agencies were pursuing a "second agenda" to crush the smaller financial services centres in the region.

Wendy Warren, chief executive officer of the Bahamas Financial Services Board, said that the island has taken "a decision to make itself heard on the world stage". The financial services industry, she said, was "energised" and its attention focussed on future development.

A new government was elected last month, which is "actively reviewing" strategies to strengthen the financial services industry. "This is a continuing evolution and we do not want to be limited to the concept of offshore," Ms Warren said. Other jurisdictions have tried to shake the offshore image, and the term is little used in Bermuda's promotional material these days. The word "offshore" has attracted a stigma because of a variety of improper practices carried out by jurisdictions previously identified in that manner.

Ms Warren denied that the move to compete with Europe on a larger stage is related to the international anti-money laundering initiatives.

Last month, the Bahamas Government announced that its legislative review would include all new laws passed to meet the OECD and other initiatives. Much of the legislation is "know your customer" legislation, "and this is the second review to ensure future compliance," Ms Warren said.

The Commonwealth of the Bahamas is an independent country, with a population of about 300,000.

Tourism accounts for about 40 percent of GDP, employs about 50 percent of the labour force and produces 70 percent of government tax revenue.

International banking is the second main industry after tourism. Almost 500 banks and trust companies operate from the Bahamas, of which about 40 percent maintain a physical presence.

The financial services sector accounts for about 18 percent of GDP and employs about a quarter of the labour force.

International business companies, estate planning, captive insurance and a ship registry are also important. The Bahamas' banking industry attracts business from South America and Canada.

Reconciling the Bahamas' wide-open banking past with the present mood of the regulatory agencies has required a fine balance.

The Bahamas is trying to put a history of acting as a staging point for drugs and for laundering drug money behind it. The Bahamas was one of the last Caribbean countries to be taken off the OECD list, waiting until March this year before committing.

It made its promise to the OECD predicated on the establishment of "a level playing field" for all financial centres conducting international financial services activities.

The phrase "level playing field" was a code, adopted by many of the Caribbean countries, for an understanding that the European countries would adopt the same high standards as those that were forced on the smaller nations.

The Bahamas has agreed to keep pace with developments adopted by OECD and non-OECD centres, so ensuring preservation of the competitive status of the island. No changes are proposed to the longstanding tax-free environment for international business, including no income tax, no corporation tax, no capital taxes and no withholding taxes, the same formula Bermuda offers.

The move to redefine the Bahamas as an "onshore" jurisdiction is therefore seen as another step away from a chequered past.

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