Jay R. Nanavati Quoted In "Bahamas Urged: Show You're Not A 'Tax Haven'", Tribune Business

The Bahamas must aggressively demonstrate and market that it is not an 'offshore tax haven', a US tax attorney yesterday saying this nation is "fighting perception more often than reality".

Caroline Ciraolo, a former US Department of Justice Tax Division head, and now partner at Kostelanetz & Fink, told Tribune Business: "I think there is a perception issue. I think that the Bahamas, like the Isle of Man, like the Channel Islands, is painted with a broad brush of 'tax haven', so they are fighting perception more often than reality. We understand the frustration of that."

Jay Nanavati, a former US Justice Department tax crimes prosecutor, who now heads Kostelanetz & Fink's Washington D.C office with Mrs Ciraolo, pointed to the Caribbean Financial Action Task Force (CFATF) report which highlighted that there have not been many money laundering prosecutions in the Bahamas.

The CFATF, in its July 2017 assessment of the Bahamas' anti-money laundering and counter-terror financing regime, said there had been no money laundering convictions in the four years prior, and just one case was before the courts.

"If there aren't problems then there shouldn't be prosecutions, but to the extent that they are there, there is a lot to be said for the deference value of bringing robust cases sometimes. I know that these types of things can be difficult to do and prove, but I think it's good for the image of the Bahamas to show that we don't just say what we are supposed to but we do it," said Mr Nanavati.

He and Mrs Ciraolo were speaking on the heels of the Association of International Banks and Trust Companies (AIBT) Nassau Conference. They warned the Bahamas to be careful about targeting the captive industry for growth, noting that the US Internal Revenue Service (IRS) has identified captives as a sector for audits and investigations.

"The captive industry is a growing industry. It certainly is something that places like the Bahamas, but BVI for instance, are seeking to attract," said Mrs Ciraolo. "You have to be cautious and aware of the global environment, because in January the US Internal Revenue Service identified captives as one of 13 campaigns that they were focused on in terms of audits and investigations.

"That is a very busy area in the US now. A lot of captives are under audit and investigations. It is important that the people involved in attracting those businesses, creating those businesses and driving clients to those businesses understand the landscape and can navigate the minefield."

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