BAHAMAS Law and Practice Contributed by: Dwayne Whylly, Kamala Richardson-Deal and Nastassia Rigby-Rodriguez, Glinton Sweeting O’Brien
5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails Payment processors and payment rails are regulated by the Central Bank, which ensures that the systems used are safe and effective for consumers. Therefore, domestic payment processors must use the rails that are approved by the Central Bank of The Bahamas. The Central Bank is committed to ensuring that The Bahamas remains up to date and competitive in the payment processing arena. The Sand Dollar, a digital currency backed by the Central Bank, was recently implemented to allow for the safe and effective digital transmission of Bahamian dollars. 5.2 Regulation of Cross-Border Payments and Remittances Cross-border payments and remittances are regulated by the Central Bank of The Bahamas. Individuals or entities resident in The Bahamas are required to obtain Exchange Control approval from the Central Bank prior to the transfer of funds outside of The Bahamas or in a foreign currency. The approval thresholds vary depending on the nature of the transaction. The transferee is under an obligation to ensure it pro - vides accurate information with respect to the trans - action and complies with prevailing AML standards. 6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms The regulation of marketplaces and trading platforms for digital assets is governed by the DARE Act 2024. By and large, the DARE Act 2024 does not make a dis - tinction between marketplaces and trading platforms for the purposes of regulation or even types of mar - ketplaces and trading platforms. Marketplaces and trading platforms are generally categorised as either “digital asset exchanges” or “digital asset deriva - tive exchanges” under the DARE Act 2024. A “digital assets exchange” is defined in the DARE Act 2024 as “a system or platform which facilitates the sale, trading or exchange of digital assets for fiat curren -
3.3 Issues Relating to Best Execution of Customer Trades The relevant legislation and regulations do not cur - rently address this aspect of fintech and, therefore, best execution requirements are not applicable. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities Lending in The Bahamas is largely done by tradi - tional means through banks and lending institutions. The banks and lending institutions have made great strides, including allowing applications to initiate an application online and through mobile apps to stream - line their lending procedures, thereby reducing wait times and in-person interactions; however, online lending in the traditional sense is not used or specifi - cally regulated in The Bahamas. 4.2 Underwriting Processes Regulations in The Bahamas currently do not stipulate the underwriting process for fiat lenders. 4.3 Sources of Funds for Fiat Currency Loans In The Bahamas, the primary lenders are the retail banks; therefore, the traditional source of fiat cur - rency funds for loan in The Bahamas are deposits. Lending is also done on a smaller scale by non-bank money lenders and on a P2P basis. In these cases, fiat currency loaned is typically lender-raised capital. Money lending in or from The Bahamas is typically a regulated activity. Banks, which lend from the depos - its they receive, are regulated by the Central Bank; whereas non-bank money lenders are regulated by the Securities Commission. Consequently, lenders are required to comply with prudential regulations in order to protect borrowers and ensure the smooth operation of the financial system in The Bahamas. 4.4 Syndication of Fiat Currency Loans There is currently no substantial market for loan syn - dication in The Bahamas. None of the relevant legisla - tion addresses this activity.
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