The beautiful tropical destination of the Bahamas is known for many things.
Want to open a bank account? Need to lower your taxes? Interested in starting an offshore business?
The Bahamas offers all that and more.
With 700 islands, the most pristine waters, and award-winning beaches, the Bahamas is a tropical haven like none other.
Celebrities like Jay Z and Johnny Depp even own private islands in the Bahamas. Talk about a star-studded location.
However, the country is world-renowned for one other reason – it’s financial services sector.
With over two hundred financial institutions including licensed banks and trust companies, the Bahamas’ financial sector is second only to its tourism sector in terms of GNP contribution.
Moreover, the Bahamas’ GNP is one of the highest in the region, owing to the stable political and economic environment.
The name the Bahamas still invokes notions of a classic tax haven from the jet-set era. Sure, once upon a time Americans would come to the Bahamas with sacks full of cash and deposit it into the Bahamian banks. Those days, however, are long gone.
The Bahamas today is a premier offshore banking jurisdiction. However, the country has strict regulations and legal frameworks to avoid money laundering and shady financial activities.
In this article, we’ll take an in-depth look into the Bahamian banking system and its pros and cons. We’ll also discuss how to open a bank account in the Bahamas.
Banking Sector in the Bahamas
For most of the last century, the Bahamas was the wild wild west of offshore banking – no rules, exchange controls, or due diligence.
Foreigners, especially Americans, came flocking to the country for all sorts of financial and business activities, some not entirely legal.
But that all changed in the 1990s. The country, determined to escape the notorious lists of FATF, European Commission, and International Monetary Fund (IMF), cleaned up its act and introduced regulations providing the legal framework for streamlined and legal financial activities.
One of the most prominent Bahamian acts regarding banking is the Banks and Trust Companies Regulation Act of 2000, which was repealed and replaced in 2020 to enhance the stability of the Bahamian banking system.
The banking industry employs nearly ten percent of the Bahamian population.
The country has no shortage of international and local financial institutions, including but not limited to trust companies, portfolio management providers, insurance companies, private banks, and wealth management providers.
The Bahamas boasts one of the largest financial sectors in the world, with over 200 licensed banks from countries like the UK, the US, Canada, Switzerland, etc.
Now that you know a bit about the banking industry in the Bahamas and its history let’s look at some of the country’s biggest and most popular banks.
Major Banks in the Bahamas
Central Bank of the Bahamas
The Central Bank of the Bahamas regulates Bahamian banks. Some of the most significant operations performed by the Central Bank of the Bahamas are:
- Maintaining the one-to-one ratio of the Bahamian dollar with the US dollar.
- Controlling gold, foreign currency, foreign exchange, and securities.
- Issuing banknotes and coins.
Commercial Banks in the Bahamas
According to the Central Bank of the Bahamas, there are eight commercial banks in the country:
- Citibank (the only US-owned commercial bank in the Bahamas)
- First Caribbean International Bank (Bahamas) Ltd. (largest local bank)
- The Finance Corporation of Bahamas (FINCO)
- RBC Royal Bank (Bahamas) Limited
- Scotiabank (Bahamas) Limited (named the Bahamas’ Best Bank 2022)
- Fidelity Bank (Bahamas) Ltd.
- Bank of The Bahamas Ltd.
- Commonwealth Bank Ltd.
The last three banks in this list are government owned. State-owned or otherwise, all these banks are top-rated among non-residents and locals for their services.
The Bahamas Development Bank is another government-owned bank favored by the local.
The majority of banks in the Bahamas are either Canadian or Caribbean.
Pros of Banking in the Bahamas
One of the Largest Offshore Financial Sectors
The Bahamas boasts the world’s fourth-largest offshore financial sector, after Singapore, Hong Kong, and the Cayman Islands.
The Bahamas also sits on an asset base of over $200 billion and boasts a capital-to-asset ratio of eleven percent, making its financial industry one of the world’s most generously capitalized financial sectors.
All these numbers are statistical proof of the country’s stability as a financial center, whether it be for investment opportunities, private banking, or wealth management.
Familiarity with Everything ‘Offshore’
Want to open an offshore company and conduct business? The country has a legal framework supporting that.
Want to open a bank account as a foreigner or a non-resident? You’ll find several banks ready to take you in.
However, is it easy to open a bank account in the Bahamas as a non-resident? That entirely depends on the bank you choose, the type of account you require, and the thoroughness of your documents.
Opening a Bank Account Remotely
The Bahamian banks aren’t the best rated for online banking and remote services. However, some banks provide the option to open certain accounts remotely.
Like any other banking service in the country, you’ll need to research and check which banks offer remote account openings.
OR, please feel free to contact us and let us do the legwork for you.
Cons of Banking in the Bahamas
Now that you know about the pros of banking in the Bahamas let’s look at the cons. Some offshore consultants will let you believe that the Bahamas is a dream destination with no taxes that’ll solve all your financial woes almost overnight.
The reality, however, is far from that. In terms of opening a non-resident (offshore) bank account, you’ll face most of the same problems faced elsewhere.
The lack of technology is highly off-putting, and you have to stand in a queue for most activities. Yes, even in this day and age.
Lengthy Procedures
Opening bank accounts in the Bahamas, especially offshore ones, is quite a lengthy process. Not only do you have to provide basic identity documents like your passport, but you also have to provide proof of funds.
Foreign investors seeking to open foreign currency accounts in one of the Bahamian commercial banks must first register and receive approval from the Central Bank.
Restrictions
You can only open a Bahamian bank account in Bahamian dollars if you can prove your employment.
Moreover, you are also asked to provide the income amount so that the bank can later verify that the incoming payments are within the specified limit.
Limit on the Account Usage
Nomad Capitalist’s business director Mr. Doerfler faced this issue when opening an account in the Bahamas. Watch this short video to hear him talk about his banking woes.
As he said, to open a bank account in the Bahamas, you have to sign a statement agreeing to the fact that you won’t use the funds for any other purpose other than yourself, which of course is a huge nuisance if you have a spouse or a family.
The banks also don’t provide a second bank card. A limit like that bars any family member of yours from using your account unless they’re added as a signatory on the bank account (which comes with a number of requirements).
Outdated System
Remember when you had to stand in line to make money transfers? If your answer is no, your banking experience in the Bahamas might help rekindle those memories.
International transactions that should happen online and be done in a minute take at least an hour in the country. You have to stand in line, deal with the tellers (who are already scarce in numbers), provide documentation, get the documents signed by a manager, and then your transaction may be complete.
Taking Money Out of the Country is a Chore
You must exchange the money for US dollars to take it out of the country. To be able to do that, each year, you have to visit the Central Bank of the Bahamas and apply to exchange Bahamian dollars into US dollars. For that, you have to prove that you’re a foreigner. Afterward, you get approval for a specified amount (generally your specified income).
The bank charges specific fees for this process, so even though the Bahamian dollar is pegged one-to-one with USD, you’ll still see a bit of the difference after the exchange.
Alternatively, in some cases, you can show an international plane ticket and your passport to exchange a certain amount of capital. Still, getting any assets out of the country is very restrictive.
Moreover, local Bahamians are unable to invest abroad. They have to invest in Bahamian assets, which is why most people own more than one property, even if they’re not rented.
Because that’s the only place they can store cash outside of the bank. Owning more than one property is the Bahamian version of diversifying your assets.
How to Open a Bank Account in the Bahamas
The documentation and the bank account opening procedure varies depending upon the bank and the type of account you choose to open.
However, expect to provide the following basic documents no matter which bank or account you’re going for:
- Proof of Identity (passport, ID card, driving license, etc.)
- Proof of Residence (A legal address, utility bill, etc.)
- Occupation Details (source of funds)
- Citizenship status
The abovementioned list is not exhaustive by any means, and banks may require additional documents as they see fit.
Corporate accounts will require much paperwork and additional documents like evidence of licensed activity, a certificate of incorporation, etc.
Ready to Bank in the Bahamas?
This article has discussed the Bahamian banking sector, its pros and cons, major banks in the Bahamas, and how to open a bank account in the country.
However, as with most things, knowledge isn’t quite enough when dabbling in offshore banking, no matter how tax-friendly and popular the offshore jurisdiction is.
Want to know which Bahamian banks will accept you as a foreigner? Which won’t ask for a fortune in the advance deposit? Most importantly, which banks won’t devour your most precious asset, i.e., time?
We’ve dealt with our fair share of international and offshore banks, and we know how to solve this puzzle – no matter how overwhelming it initially seems.
All you have to do is reach out, and we’ll make your banking woes a thing of the past.
