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In terms of development, size and market share, The Bahamas is generally regarded as one of the world’s leading centres for offshore banking. There are between 300 to 400 registered offshore banks and trusts on the islands. A typical offshore bank provides services such as an offshore bank account that has the added investment benefits of low or no taxation, relaxed regulation and, at times, better protection. The Bahamian economy has been increasingly diversifying into financial services, most prominently banking, trusts, mutual funds and insurance. The financial services sector plays a crucial role in supporting and developing the economy. This occurs both directly through employment opportunities, and indirectly by procuring from and providing vital services to other key sectors of the economy. Additionally, the financial services sector accounts for a significant proportion of GDP, 36 per cent in 2011. The domestic financial system, which is dwarfed by the offshore sector, is dominated by banks, mostly subsidiaries and branches of United States and Canadian entities. Between locally and foreign-owned banks the sector comprises nine institutions. Domestic banks provide typical commercial banking services such as personal banking and corporate banking. Domestic banks also engage in significant levels of offshore activity. In the wake of the global financial crisis the banking sector has undergone consolidations and decreased service fees (2011).
