International business and financial services officials here are warning of a possible slowdown in new activities within that sector as a result of the Panama Papers scandal.
Director of Cidel Bank & Trust Ben Arrindell yesterday said the leak of millions of files from the Panamanian law firm and corporate service provider Mossack Fonseca had brought issues of security and confidentiality into focus.
“What I am seeing is clients are saying, ‘is my information safe? If I have an account with Cidel or CIBC or whoever, is that information safe? Who has access to that information? How easy is it for people to have access to that information?’ They are also asking the same question of the [revenue agencies] in terms of if my information is going to be shared how safe is that information,” Arrindell said.
“It is also because of the scale of the leaks because with the Panama Papers there is a lot of details,” he said, pointing out that he saw two Barbados registered companies listed with information about shareholders.
Arrindell was a member of a panel organized by the Barbados International Business Association (BIBA) for its one-day international business update seminar at the Lloyd Erskine Sandiford Centre .
The wealth management expert said he did not think Barbados would be heavily impacted by the leaks since the island had always been regarded as a difficult jurisdiction for doing business. However, he predicted that the jurisdiction would not escape unscathed.
“We have not attracted 20,000 companies or ten million companies as some jurisdictions have. I think we have about 4,500 IBCs [international business centres] right now. They tended to be more established by multinationals or companies owned by individuals from the point of view of more corporate planning as opposed to the wealth management aspect. So I don’t think we are directly going to be as impacted, but there will be some fallout. So I think we will see some fall off in new business for a while,” Arrindell explained.
“I think we are going to see a slowdown in terms of new activity using international financial centres, for a little while. I don’t think it is going to last for too long, but I think we will see a slowdown.
“So I think it is going to be an uphill battle for a few years to separate using an offshore entity for tax minimization purposes from illegal activities,” he added.
However, Arrindell said the Panama Papers scandal also brought to light the need for companies to up their game when it came to knowing about their customers and their customers’ clients.
Adding his voice to the discussion BIBA President Andrew Alleyne agreed that the Panama Papers leak was “likely to reduce the use of international financial centres overall around the world”.
However, Alleyne said Barbados would still stand out as a quality jurisdiction that adheres to a number of international treaties and agreements and requirements, as well as having strong local legislation.
“I am going to be optimistic and assume that we will see a flight to quality,” Alleyne said. (MM)