Current Perspective

The Bahamas remains a leading international financial services hub and jurisdiction of choice for international wealth planning structures. Overall, according to the Central Bank of The Bahamas Regulatory and Supervisory Update, 4 February 2026, the domestic economy maintained its positive growth trajectory through 2025, driven primarily by the tourism sector. Against this background, a number of global downside risks continue to shape the outlook; including higher tariffs on international trade, uncertainty surrounding global trade policy, elevated geopolitical tensions, global oil price volatility and the existential threat of climate change.

From a regulatory perspective, the on-site inspection for The Bahamas’ fifth round Caribbean Financial Action Task Force (CFATF) Mutual Evaluation, that will focus on the effectiveness of its AML/CFT regime, is scheduled for October 2026. This timetable coincides with the introduction of a number of regulatory amendments designed to ensure compliance with international best practices, some of which are considered below.

The themes which have dominated the legal and regulatory framework relating to financial services so far in 2026 include:

• the refinement of the existing regulatory framework to comply with international best practices;
• the augmentation of the financial services product toolkit through the introduction of the usufruct; and
• the expansion of the digital assets legislative framework through the introduction of decentralised autonomous organisations (also known as DAOs).

Compliance with international best practices

As a demonstration of its continued commitment to compliance with international best practices, a number of amendments were made to the statutes regulating Bahamian corporate entities, namely the Companies Act, 1992 (CA) and the International Business Act, 2000 (IBCA, and together with the CA, the “Companies Legislation”) on 19 January 2026. This aligns local statutes with the Financial Action Task Force (FATF)’s strengthening of Recommendation 24 (of its list of 40 Recommendations), regarding the Transparency and Beneficial Ownership of Legal Persons.

Under the revised Recommendation 24, a multi-pronged approach must be utilised for the collection of beneficial ownership information to ensure that adequate, accurate and up-to-date information on beneficial ownership is available, and effective measures must be taken to ensure that nominee shareholders are not misused for money laundering or terrorist financing.

The principal objective of the amendments to the Companies Legislation, which were implemented through the Companies (Amendment) Act, 2025 (CAA) and the International Business Companies (Amendment) Act, 2025 (IBCAA) together with the CAA (the “Amending Acts”), was to address the misuse of nominee director and shareholder arrangements, for money laundering, terrorist financing and proliferation financing prior to the upcoming CFATF Mutual Evaluation. This was achieved through the introduction of enhanced transparency requirements relating to nominee shareholder arrangements and the prohibition of nominee director arrangements.

Under the revised framework, where a subscriber or shareholder holds shares as a nominee, that fact must now be specified both in the company’s memorandum of association and on its register of members. The nominee shareholder is required to execute a declaration of trust identifying the beneficiaries on whose behalf the shares are held, and a record of that declaration must be maintained at the company’s registered office. Beyond those initial requirements, nominee shareholders must identify and provide particulars of the persons on whose behalf shares are held, the company must notify its registered agent of any nominee arrangements and of any changes to those arrangements within 15 days, and the registered agent must take reasonable steps to verify the identity of the ultimate beneficial owner, in accordance with the provisions of the Register of Beneficial Ownership Act, 2018 (ROBOA).

The Amending Acts also imposed a statutory prohibition on nominee director arrangements; specifically, no person may be appointed or serve as a director if that person is acting pursuant to any agreement, arrangement or understanding, whether express or implied, to act in accordance with the instructions, directions or wishes of another person in relation to the exercise of their duties or powers as director. Moreover, companies are required to take reasonable steps to ensure that no person is appointed or continues to serve as a nominee director; that is, as a person appointed as a director on behalf of another under any form of control, instruction or influence, whether formal or informal, direct or indirect, other than through the exercise of proper corporate governance or fiduciary duty.

While the Amending Acts do not break new legal ground, because the common law and fiduciary duties imposed upon directors of Bahamian companies, including the duty to exercise independent judgement remain unchanged, they do introduce an express statutory prohibition on nominee director arrangements and substantial penalties on any person acting as a nominee director and any company which knowingly retains a nominee director. Acting as a nominee director is an offence, punishable on summary conviction by a fine of up to USD50,000 and/or imprisonment of up to 12 months. A company that knowingly retains a nominee director could be liable to a civil penalty of up to USD1,000 per day.

Introduction of a new usufruct product

Over the last three decades, The Bahamas has been at the forefront of financial services product innovation, developing new products designed to meet the evolving global environment and client needs. Examples include, smart funds (introduced in 2004), Bahamian foundations (introduced in 2004), Bahamian investment condominiums or “ICONS” (introduced in 2014) and the Sand Dollar (launched in 2020) which was the first digital currency issued by a central bank.

In 2026, the Usufruct Interest Act, 2026 (UA) introduced the concept of the usufruct, a civil law institution established in continental European and Latin American legal systems, including Brazil, into Bahamian law. The UA allows for the creation, registration and termination of a usufruct.

A usufruct is a right in rem (ie, a right that can be enforceable against everyone, not just a specific individual), of limited duration, that allows the usufructuary to use, benefit from and/or hold governing control of property, while the legal owner retains the legal ownership of the property. The usufruct therefore involves the separation of the legal ownership of an asset (which is retained by the owner), from the right to use and enjoy that asset and to collect its benefits (referred to in some civil law jurisdictions as “fruits”) which vest in the usufructuary. The usufructuary has the legal right to use and benefit from the legal owner’s property and has a duty of care to preserve the property.

A usufruct may be established in writing by an agreement or by will or trust disposition, in the case of a natural person for up to 99 years or in the case of a legal person for up to 30 years, in respect of a wide range of assets located in The Bahamas or to which Bahamian law is applicable; including, among others, movable or immovable assets, debts, shares, receivables and digital assets.

Registration of a usufruct is optional. There is no legal requirement for public registration of the agreement or will by which the usufruct is created. Where a usufruct is created over shares in a Bahamian incorporated or registered company, the company may apply to the Registrar of Companies in the prescribed manner, and pay the prescribed fee to register the usufruct.  Where the usufruct is created over any other asset, the application must be made to the Registrar of Records. Registration confers the added benefit of making the usufruct enforceable against third parties from the date of registration, subject to any prior registered security interests or encumbrances, unless otherwise provided by law. It should be noted that while the Regulations under the UA have not been promulgated, as a part of the application for registration, the nature of the usufruct interest will be required to be disclosed.

The UA provides for the register of usufructs that will be maintained by the Registrar of Companies and the Registrar of Records in respect of all usufructs submitted for registration. The following details will be included in the register of usufructs in respect of all registered usufructs:

• the name of the legal owner;
• the name of the usufructuary;
• the nature of the corporate interest;
• the duration of the usufruct; and
• any economic, voting or other rights affected.

While the register is publicly available for inspection for the purpose of verifying registration, detailed economic arrangements regarding the usufruct will not be available for inspection.

The usufruct structure is a useful option for clients who wish to incorporate the separation of use and ownership rights into their governance or intergenerational wealth planning strategies, or who reside in jurisdictions where the concept is more widely recognised and understood. While a usufruct arrangement shares certain objectives with a trust, particularly in facilitating succession planning and the transfer of wealth across generations, it is not intended to replace a trust structure. Rather, it provides an additional tool that may be better suited to the legal, cultural, or practical objectives of certain clients.

One of the most common use cases in Brazil, for example, is for parents to transfer legal ownership of property to their children during their lifetime. This achieves certain financial and estate planning objectives, while enabling the parents to retain the use, enjoyment and control of the property for the remainder of their lives.

Introduction of decentralised autonomous organisations

The Bahamas continued to expand its digital assets legislative framework in 2026 through the enactment of the Decentralised Autonomous Organisations Act, 2026 (DAOA). The DAOA establishes a framework for the registration and regulation of DAOs by the Securities Commission of The Bahamas in its capacity as Registrar. A DAO is defined under the DAOA as an organisation without a central entity that operates through a series of smart contracts deployed on a permissionless distributed ledger. To qualify for registration, an applicant must first be established as an exempted limited partnership, a purpose trust or a licensed SMART Fund. Upon registration, a DAO acquires a legal personality separate from that of its governance token holders.

The DAOA seeks to combine decentralised governance with regulatory oversight by requiring each registered DAO to appoint at least one responsible person resident or registered in The Bahamas, who is accountable for the activities of the DAO and responsible for its communication, compliance and administrative functions. Registered DAOs are also required to maintain a publicly accessible constitutive document setting out their governance framework, decision-making procedures, dispute resolution mechanisms, governance token rights and statement of purpose, among other matters. Registration will only be granted where the Registrar is satisfied that the applicant operates on a permissionless distributed ledger, utilises publicly available open-source code, maintains appropriate security and operational resilience measures, and has a governance structure demonstrating sufficient decentralisation.

The DAOA complements the existing regime established under the Digital Assets and Registered Exchanges Act, 2024, pursuant to which governance tokens issued by a registered DAO are classified and regulated.

Conclusion

The legislative developments in the financial services sector in 2026 illustrate the continued evolution of the Bahamian regulatory framework to include new products to address evolving client needs, while reinforcing the overall commitment to compliance with global standards.