Jamaica Halts Offshore Registry Plans

Jamaica just dodged a major bullet in the fight to avoid being blacklisted.

So, a couple of weeks ago the Companies Office of Jamaica put out a request for a consultant to help them set up and operate an offshore business registry.

Offshore businesses refer to companies that are registered in one country but operate out of another. 

For example, PROVEN is a Jamaican company that operates here but is registered in St Lucia. There are tons of other examples like First Rock, which is also registered in St Lucia. 

FTX, Sam Bankman-Fried’s crypto exchange, was registered in the Bahamas despite being an American company. 

I even considered registering Money Media in St Lucia when we first got started.  So this is common practice in the business world. 

And the main reason is because of taxes. Most countries that offer offshore business registries, offer lower taxes or tax incentives to international entities, to attract business to the country.

I mentioned St Lucia earlier.  They had really great incentives for business owners, but they’ve since phased it out because of some of the issues we’ll talk about later on. 

Now, this database that the COJ was proposing to set up would have been a record of international companies that register their business in Jamaica but operate in a different country. 

Now when I first heard this my first reaction was…huh? Why would Jamaica do this? 

I mean, in their press release, the COJ said that setting up the registry would help Jamaica tap into a US$7 TRILLION market. Which would bring a lot of activity to the economy. 

But I was thinking, ‘how is this gonna affect Jamaica’s goal of avoiding the Financial Action Task Force’s blacklist, something the country was already threatened with last year.  We’ve been making strides to get off the greylist.   

The FATF blacklist is for countries that aren’t taking strong enough measures to prevent money laundering and terrorism financing. Jamaica managed to address several of the issues that the agency flagged.  Less than 10 problems are outstanding.

Matter fact, I just did an interview with COJ boss Shellie Leon about some changes to the business registration process, which is another step towards compliance with FATF.

So why risk it?

I mean, we don’t have to look far to see the negative impact that the offshore industry has on the reputation of countries like Jamaica. 

A few months ago, I talked about my home country of Belize being blacklisted by the European Union after being flagged as an offshore tax haven. 

A tax haven is a country where foreign businesses and individuals pay little or no taxes for their bank deposits.

But it wasn’t just Belize. Antigua and Barbuda, Anguilla, the Bahamas, Trinidad and Tobago, and Turks and Caicos were all listed as non-cooperative jurisdictions aka blacklisted, by the EU. 

Belize, Bahamas and TCI were just removed from the EU blacklist very recently, much to their relief.

Like I said earlier, one of the major appeals of offshore registries is tax incentives, but that comes with its own set of challenges.

Again, why risk it? Especially, when Jamaica is so close to setting things right with FATF?

Well, it seems like I wasn’t the only one with that concern because the Companies Office has since withdrawn the request for a consultant.

In a statement, the agency said they were withdrawing the offer because the “required legal framework wasn’t in place.” 

The law would need to match up with the Companies Act on beneficial ownership requirements plus be in line with international standards and FATF commitments. 

So we reached out to the Companies Office to clarify.  Does this mean they’re scrapping the whole idea or just putting it on hold until the right law is established?

Formally, we were told to just refer to the official statement, but informally, we definitely got that vibe that was a no-go.

And that’s the bottom line.