Securities Commission of The Bahamas (SCB)

Overview

The Securities Commission of The Bahamas (SCB), formerly known as the Securities Board of The Bahamas, was established in 1995 under the Securities Board Act. The Commission's mandate has evolved and expanded significantly, most notably through the Securities Industry Act 2011, which modernized the regulatory framework for capital markets, securities, and investment activities in The Bahamas.

Current Leadership: Christina Rolle serves as Executive Director, having assumed this role on 26 January 2015. She succeeded Hillary H. Deveaux, who served as interim executive director from September 2013 through 2014.

Strategic Position: The Bahamas operates as an international financial center with significant capital markets, investment fund, and digital asset sectors. The SCB's regulatory evolution reflects The Bahamas' commitment to modernizing its financial services framework while maintaining robust consumer protection and market integrity standards.

The SCB's primary responsibilities encompass the regulation of securities, capital markets activities, investment funds, financial and corporate service providers, and digital asset businesses—making it one of the Caribbean region's most comprehensive securities regulators.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

The SCB exercises comprehensive regulatory authority over securities and capital markets activities in The Bahamas.

Regulatory Scope:

• Licensing and supervision of securities dealers and brokers

• Investment adviser registration and oversight

• Market conduct regulation and anti-fraud enforcement

• Corporate disclosure and transparency requirements

• Listing standards for securities exchanges

Market Participants:

Securities market participants subject to SCB regulation include:

• Securities dealers and brokers

• Investment advisers and financial advisors

• Custodians and transfer agents

• Securities exchanges and alternative trading systems

• Market surveillance and enforcement functions

Licensing Requirements:

The SCB requires licensing for entities conducting regulated securities activities, with distinct licensing categories based on:

• Types of securities activities conducted

• Scope of client base served (retail, institutional, or both)

• Compliance infrastructure and financial resources

• Management and employee qualifications

Regulatory Standards:

Licensed securities market participants must comply with:

• Capital adequacy and financial resource requirements

• Customer protection and segregation of client assets

• Conflicts of interest disclosure and management

• Sales practice and market conduct rules

• Periodic examination and audit obligations

Investment Funds Regulation

The Investment Funds Act 2019 and its accompanying Investment Funds Regulations 2020 constitute The Bahamas' modernized investment fund regulatory framework, aligning with international standards and best practices.

Legislative Evolution:

The 2019 Act repealed and replaced the Investment Funds Act 2003, modernizing regulatory requirements to:

• Bring Bahamian law into harmony with international standards and IOSCO recommendations

• Expand the SCB's regulatory powers over investment funds and related service providers

• Strengthen investor protections and market integrity

• Enable international competitiveness while maintaining prudential oversight

Regulated Entities:

The Investment Funds Act applies to all registrants and licensees, including:

• Investment funds (open-ended, closed-ended, and alternative funds)

• Investment fund managers and advisors

• Investment fund administrators

• Custodians and service providers

• Non-Bahamas based investment funds marketing in The Bahamas

Licensing and Registration Framework:

The SCB maintains separate licensing regimes for different investment fund types and service provider categories:

• Domestic and international investment fund registration

• Investment manager and advisor licensing

• Fund administrator licensing

• Custodian and service provider authorization

Regulatory Requirements:

Investment fund participants must demonstrate:

• Adequate governance and internal controls

• Portfolio diversification and risk management

• Valuation methodologies and pricing accuracy

• Periodic reporting and disclosure to investors

• Compliance monitoring and examination readiness

Investor Protections:

The SCB enforces investor protection requirements including:

• Fund manager and administrator capital and liquidity requirements

• Client asset segregation and protection

• Conflict of interest management and disclosure

• Redemption rights and liquidity standards

• Periodic financial reporting to investors

Digital Assets Regulation (DARE Act 2020)

The Digital Assets and Registered Exchanges Act 2020 (DARE Act) established The Bahamas as one of the first jurisdictions to enact comprehensive regulatory legislation for the digital asset industry. This strategic choice positioned the SCB as the primary regulator for digital assets, reflecting the view that digital assets often function as securities and warrant securities regulation expertise.

Legislative Framework:

The DARE Act provides for:

• Regulation of digital asset businesses and token offerings

• Registration of digital asset exchanges and trading platforms

• Digital asset payment service providers

• Initial token offering (ITO) participants and issuers

• Comprehensive anti-money laundering and combating terrorist financing (AML/CTF) requirements

Scope of Regulation:

The DARE Act applies to any organizer, issuer, founder, purchaser, or investor participating in:

• Formation, promotion, maintenance, and organization of token offerings

• Issuance, creation, sale, or redemption of digital tokens and assets

• Digital asset exchange operations

• Digital asset payment service provision

• Any activity regardless of physical location from which conducted

Regulatory Authority:

The SCB holds exclusive regulatory authority over digital asset businesses, with powers to:

• License digital asset businesses and exchanges

• Establish operational and compliance standards

• Conduct examination and surveillance

• Investigate violations and enforce regulatory provisions

• Coordinate with international regulators on cross-border digital asset activities

AML/CFT Compliance Requirements:

Digital asset businesses are subject to stringent anti-money laundering and counter-terrorist financing obligations:

• Compliance with established AML/CFT laws applied to financial institutions

• Customer due diligence and beneficial ownership verification

• Suspicious activity reporting and transaction monitoring

• Sanctions screening and compliance

• Enhanced due diligence for higher-risk customers and activities

Regulatory Evolution:

The DARE Act 2020, initially passed in December 2020 following parliamentary approval, established a foundational framework for digital asset regulation. The regulatory regime has subsequently evolved through:

• Regulatory guidance and interpretive statements from the SCB

• Stakeholder consultations and feedback incorporation (DARE Bill 2023 consultation)

• Comprehensive reforms addressing evolving market dynamics (2024 legislative updates)

• Ongoing coordination with international digital asset regulators

Financial and Corporate Service Providers Regulation

The SCB regulates financial and corporate service providers operating in The Bahamas, including entities providing trust, company formation, administration, and related services.

Regulatory Scope:

• Trust company licensing and supervision

• Company service provider registration

• Management company oversight

• Fund administration and custodian services

• Other fiduciary and professional services

Regulatory Requirements:

Financial and corporate service providers must maintain:

• Adequate capitalization and financial resources

• Professional liability insurance and indemnification

• Governance and compliance infrastructure

• Client asset segregation and protection

• Periodic examination and audit readiness

The SCB exercises comprehensive AML/CFT supervision across all regulated entities and sectors.

Legislative Framework:

• Financial Transactions Reporting Act - Establishes suspicious activity reporting obligations

• Anti-Terrorism (Financial and Other Measures) Act 2002

• International standards compliance (FATF recommendations, CFATF protocols)

• UN Security Council resolution implementation

Supervision Mechanisms:

• Customer due diligence and beneficial ownership verification

• Enhanced due diligence for higher-risk customers and jurisdictions

• Transaction monitoring and suspicious activity reporting

• Sanctions screening and compliance

• Personnel training and awareness obligations

• Periodic examination and enforcement oversight

Risk-Based Approach:

The SCB applies risk-based AML/CFT supervision, tailoring compliance intensity to:

• Customer risk profile (individuals, corporate entities, PEPs, high-risk jurisdictions)

• Transaction type and complexity

• Geographic risk factors

• Customer relationship nature and duration

Regulatory Powers

The SCB possesses comprehensive enforcement authorities to ensure compliance with The Bahamas' securities, investment fund, digital asset, and AML/CFT regulatory requirements.

Enforcement Mechanisms:

Administrative Actions:

• Suspension or revocation of licenses

• Imposition of administrative fines and penalties

• Cease and desist orders

• Consent orders and settlement agreements

• Asset freeze and preservation orders

Investigation Powers:

• On-site examination authority

• Subpoena power for books, records, and testimony

• Interview authority for entity personnel

• Forensic accounting and document analysis

Disciplinary Actions:

The SCB applies graduated enforcement approaches ranging from:

• Advisory communications and warning letters

• Regulatory undertakings and corrective action requirements

• Financial penalties and disgorgement orders

• License suspension or revocation

• Public enforcement actions and industry alerts

Criminal Referral:

For serious violations, the SCB may refer matters to:

• Royal Bahamas Police Force

• Attorney General's Office

• Financial Intelligence Unit

• International law enforcement authorities

Notable Enforcement History:

FTX Digital Markets Enforcement (2022-2025):

The SCB took significant enforcement action against FTX Digital Markets (FDM) for regulatory violations:

• Initial Action: The SCB suspended FTX's registration and transferred digital assets to Commission custody for safekeeping (November 2022)

• Regulatory Violations: Breaches of the Digital Assets and Registered Exchanges Act 2020 and Financial Transactions Reporting Act

• Asset Control: The SCB appointed a provisional liquidator to oversee FTX asset preservation and management

• Financial Claim: The Commission established a $221.55 million regulatory penalty claim against FTX DM for enforcement violations

• Bankruptcy Coordination: The SCB coordinated with FTX bankruptcy proceedings in the United States, with the Supreme Court of The Bahamas approving an agreement (January 2025) whereby Joint Official Liquidators subordinated the SCB's regulatory penalty claim

This enforcement action demonstrated the SCB's capacity to:

• Identify and suspend operations of non-compliant digital asset entities

• Preserve assets and prevent creditor distribution while maintaining regulatory authority

• Pursue substantial financial penalties through regulatory and legal proceedings

• Coordinate with international bankruptcy and regulatory authorities

Regulatory Role and Function

Legal Foundation

The SCB derives its comprehensive regulatory authority from multiple statutory instruments, reflecting the evolution of financial regulation in The Bahamas.

Primary Statutory Framework:

Securities Industry Act 2011 - The cornerstone legislation establishing the SCB's authority over:

• Securities and capital markets activities

• Securities market participants and intermediaries

• Broker-dealer licensing and supervision

• Market conduct and anti-fraud standards

• Investor protection and disclosure requirements

Investment Funds Act 2019 - Modernized legislation governing:

• Investment fund licensing and registration

• Investment fund managers and administrators

• Fund investor protections

• International fund manager operations in The Bahamas

• Compliance with global investment fund standards

Digital Assets and Registered Exchanges Act 2020 (DARE Act) - Pioneering legislation establishing:

• Digital asset business regulation

• Digital token exchange registration and supervision

• Digital asset service provider oversight

• AML/CFT compliance for digital asset participants

Financial Transactions Reporting Act - Establishes:

• Money laundering reporting obligations

• Suspicious activity reporting requirements

• AML/CFT enforcement mechanisms

Licensing and Authorization Relevance

The Securities Commission of The Bahamas (SCB) licenses and authorizes capital market participants in Bahamas:

The licensing process involves assessment of capital requirements, competency of key personnel, compliance systems, and risk management frameworks.

Payments and Money Movement Relevance

The Securities Commission of The Bahamas (SCB) oversees securities settlement and post-trade infrastructure in Bahamas:

Payment Systems Governed or Overseen

The SCB oversees securities settlement infrastructure in Bahamas:

[Specific system names require verification from official sources]

Relationship to Other Regulators

The SCB maintains active engagement with international securities regulators, financial stability bodies, and peer supervisors.

International Organization Memberships:

IOSCO (International Organization of Securities Commissions):

• Ordinary member of IOSCO

• MMOU signatory - Multi-lateral Memorandum of Understanding signatory

• Enhanced MMOU signatory - One of nine jurisdictions signing the IOSCO Enhanced MMOU

• Committee memberships:

• Committee 3: Regulation of Market Intermediaries

• Committee 4: Enforcement and the Exchange of Information

• Inter-American Regional Committee: Regional securities coordination

• Growth and Emerging Markets Committee: Emerging market regulatory standards

Regional Coordination:

• Caribbean Financial Action Task Force (CFATF) - Regional FATF body membership

• Caribbean securities regulators coordination forum

• Bilateral supervisory agreements and memoranda of understanding with peer regulators

Cross-Border Cooperation:

The SCB maintains bilateral supervisory relationships with:

• U.S. Securities and Exchange Commission (SEC)

• Financial Conduct Authority (UK)

• Other major securities regulators

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Securities Commission of The Bahamas

• Website: www.scb.gov.bs

• About the SCB: About Us

• Board Structure: The Board

• Supervision and Regulation: Supervision

• Digital Assets (DARE): DARE Act Regulation

• Investment Funds Act: Investment Funds

• Enforcement: Enforcement Actions

Regulatory Resources:

• Securities Commission of The Bahamas - Official Website

• Legislative Framework and Acts

• Bahamas Government Agency Portal

Notes on Naming and Language