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  • Elizabeth A. McMorrow

CRS: Bahamas Changes Controlling Person Threshold – Who Is Next?

The Bahamas issued revised CRS Guidance Notes on August 3, 2018. Included in the revisions is a change in the definition of Controlling Person. The Bahamas will now use a 10% threshold for CRS reporting commencing in 2019.

Controlling Person Defined

The Bahamas CRS Guidance provides the following definition for Controlling Person:

  • Any natural person that holds directly or indirectly more than twenty-five percent (25%) of the shares or voting rights of an Entity as a beneficial owner.

  • Any natural person that owns or controls 25% or more of any class of the person’s voting securities, excluding any securities that the security holder, if a registrant, holds in the course of a public distribution; or

  • Any natural person who is able to affect materially the control of the person, whether alone or by acting in concert with another person.

Bahamas AML/KYC

The OECD advised that for purposes of determining Controlling Persons thresholds under CRS, a CRS jurisdiction must follow its own domestic AML/KYC legislation.

The Bahamas Guidelines for Supervised Financial Institutions on the Prevention of Money Laundering & Countering the Financing of Terrorism (AML Guidelines) states:

For the purposes of these Guidelines, the Central Bank defines “controlling interest” as an interest of ten percent or more in a corporate entity’s voting shares.

Referencing its AML/KYC procedures, the Bahamas states in its revised CRS Guidance the threshold for identifying Controlling Persons shall be 10% for reporting commencing in 2019.

Caymans Islands and Now Bahamas

The Cayman Islands announced in March that it updated its CRS self-certifications to require that Passive Non-Financial Entities (NFEs) disclose individuals with direct or indirect ownership or control of 10% or more of the shares or voting rights of the Passive NFE. Like almost all CRS jurisdiction, the Cayman Islands’ threshold was 25%. [See my May 7, 2018 blog: CRS: Why Is Cayman Asking for Even More Controlling Persons?]

The following summarizes the applicable thresholds for the Cayman Islands and the Bahamas:

Who Is Next?

Is this change in Controlling Person standard a pattern to soon be followed by other jurisdictions? Many AML/KYC programs are based on a 25% standard. However, there are a few jurisdictions that have a lower threshold:

  • Canada 10%

  • British Virgin Islands 10%

  • Mauritius 20%

It will be important to watch these jurisdictions to see whether they also will align their CRS legislation definition of Controlling Person with their AML legislation.

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