The Bahamas Asset Protection Trusts
The Bahamas enacted the Fraudulent Dispositions Act, 1991 effective April 5, 1991. This act sometimes referred to as the “Two Year Trust Act” because of its two-year statute of limitations which begins to run from the date of the transfer, is referred to in a government-sponsored publication as “a bold package of new financial laws aimed at winning back customers lost to rival offshore jurisdictions and attracting those seeking a safe haven for investing, depositing or protecting their assets.”
The Fraudulent Dispositions Act provides that “every disposition of property with an intent to defraud and at an undervalue shall be voidable at the instance of a creditor thereby prejudiced.” The fraud must be “wilful…” the undervaluation must be “significant…” and the burden of proof is on the creditor.
The Bahamas has a strong secrecy law found in section 10 of the Bank and Trust Companies Regulation Act of 1965, as amended. This section provides in pertinent part that “No person who has acquired information in his capacity as…director, officer, employee…agent…counsel and attorney…auditor…[or] inspector…shall, without the express or implied consent of the customer concerned, disclose to any person any such information relating to the identity, assets, liabilities, transactions, accounts or a customer except…when a licensee is lawfully required to make disclosure by any court of competent jurisdiction within the Bahamas….”
This section provides further that “Every person who contravenes the…[above provision] shall be guilty of an offense against this Act and shall be liable on summary conviction to a fine not exceeding fifteen thousand dollars or to a term of imprisonment not exceeding 2 years or to both such fine or imprisonment.”
An application pursuant to a letter rogatory process is required to implement this process. In connection therewith The (Evidence) Proceedings in the Foreign Jurisdiction Act, 1976 will only permit the production of evidence in criminal matters and then only after the “institution” of proceedings. Further, the author understands that the Bahamanian central bank reports “large transactions” unless the customers have an “existing relationship” with a bank or are recommended by “reputable” parties.
The services of experienced and excellent trustees are readily available in the Bahamas. It, like a number of Caribbean jurisdictions, is readily accessible via convenient transportation and communication links. Accessibility is not always a desirable characteristic for a jurisdiction.