Key Takeaways
- Multiple bodies assess The Bahamas separately, including the EU's Annex I and Annex II, the FATF, and the OECD, each with its own criteria.
- Listing status can trigger enhanced due diligence and correspondent banking friction, even where a jurisdiction has recently been delisted.
- Specific deficiencies cited come with action plans, and meeting those commitments is what drives a jurisdiction's removal from a list.
- Adviser and investor perception often lags formal standing, so checking current status across all lists matters before structuring.
The Bahamas on the Global Watchlists: What Listing Status Means for Foreign Owners
The Bahamas holds a clean position on every formal grey and black list maintained by the bodies that matter to a foreign-owned company: it sits on neither the Financial Action Task Force (FATF) grey or black list, nor the EU list of non-cooperative jurisdictions. That was not always the case. The country spent time under FATF increased monitoring and on the EU blacklist before exiting both, and one residual flag remains under an OECD substance review.
This article traces that record across the FATF, EU, and OECD frameworks, explains what each status meant in practice, and sets out where the jurisdiction stands today. It is most useful to non-resident owners, investors, and their advisers weighing incorporation or assessing banking and counterparty risk for an existing entity.
Why Jurisdictions Get Grey or Black Listed: The Bodies and Their Criteria
Three separate systems decide whether a country carries a watchlist label, and they measure different things. Understanding which body flagged what helps you read a listing correctly rather than treating every list as one.
The FATF, founded in 1989 by the G7, sets 40 Recommendations on anti-money-laundering and counter-terrorism financing. Its black list, formally "High-Risk Jurisdictions subject to a Call for Action," names countries with serious strategic deficiencies and asks members to apply enhanced due diligence or, at the extreme, counter-measures.
The FATF grey list, officially "Jurisdictions under Increased Monitoring," is a different and softer status. It marks countries that have strategic shortcomings but are working through an agreed action plan, and it is meant to be temporary.
Grey listing usually follows a weak Mutual Evaluation Report (MER), the peer review run by FATF and its regional bodies. Fifteen or more non-compliant or partially compliant ratings on technical compliance, or poor effectiveness scores, can trigger the designation. Exiting requires demonstrated reform: legislation, supervisory capacity, prosecutions, and asset recovery, verified by an on-site visit.
The European Union runs its own list on tax-governance criteria drawn from OECD work, including the Global Forum on Transparency, the Forum on Harmful Tax Practices, and the Inclusive Framework on BEPS. Annex I (the blacklist) covers jurisdictions that have not engaged constructively or have failed to deliver promised tax-transparency and fair-taxation reforms.
Annex II (the grey list, or "state of play" document) holds jurisdictions that fall short but have committed to reform. The Code of Conduct Group for Business Taxation manages the EU list, the European Commission monitors it, and the Council updates it twice a year.
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The EU Lists: The Bahamas on Annex I (Blacklist) and Annex II (Greylist)
On 4 October 2022, the EU added the country to its Annex I blacklist alongside Anguilla and Turks and Caicos Islands. The stated reason was the facilitation of offshore structures and arrangements aimed at attracting profits without real economic substance.
The Council removed it on 20 February 2024, with the change taking effect on 26 February 2024 when it appeared in the Official Journal of the European Union. The delisting was total: unlike Belize and Seychelles, which moved from Annex I to Annex II at the same time, the jurisdiction was not relegated to the grey list.
The Bahamas appears on neither Annex I nor Annex II. The EU adopted its most recent list on 17 February 2026, naming 10 jurisdictions; the country is not among them.
For context, the post-February-2026 EU blacklist covers American Samoa, Anguilla, Guam, Palau, Panama, Russia, Turks and Caicos Islands, US Virgin Islands, Vanuatu, and Vietnam. While a jurisdiction sits on Annex I, member states apply defensive tax measures: non-deductibility of costs, controlled-foreign-company rules, higher withholding tax, or limits on participation exemption. Individual states also maintain their own national lists, so requirements vary.
The FATF Grey and Black List Record for The Bahamas
In October 2018, FATF identified strategic AML/CFT deficiencies and placed the country under increased monitoring with an action plan. That grey-list status lasted just over two years.
Delisting came in December 2020, after the International Cooperation Review Group of the Americas completed its assessment. An on-site visit took place between 10 and 11 November 2020, and FATF credited the country with "significant progress" in strengthening its AML/CFT/CFP regime and meeting its action-plan commitments.
The jurisdiction has never been on the FATF black list, which names only North Korea, Iran, and Myanmar. It is a member of the Caribbean Financial Action Task Force (CFATF), the regional body for the Caribbean, and continues to work with CFATF on further improvements.
| FATF list | Status | Effective |
|---|---|---|
| Black list (Call for Action) | Not listed | Never listed |
| Grey list (Increased Monitoring) | Not listed | Delisted December 2020 |
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OECD Assessments: Harmful Tax Practices and Transparency Ratings
The OECD Forum on Harmful Tax Practices (FHTP) classifies the country as one of 11 no-or-only-nominal-tax jurisdictions (NTJs), a group that also includes Bermuda, the Cayman Islands, the British Virgin Islands, Jersey, and Guernsey. These jurisdictions have exchanged information under the NTJ standard since 2021, and their domestic substance frameworks are now considered "not harmful" by the FHTP.
Because the country imposes no corporate income tax, it cannot issue tax rulings within the scope of the BEPS Action 5 transparency framework, so it sits outside that assessment with six other Inclusive Framework members.
One flag remains. In the FHTP 2024 review, the jurisdiction was named among four (with Anguilla, Barbados, and Turks and Caicos Islands) where a need for focused monitoring on substance was identified; no issues were found for Bermuda, the Cayman Islands, the BVI, Guernsey, the Isle of Man, Jersey, or Bahrain.
On exchange-of-information transparency, the Global Forum maintains the authoritative EOIR rating. No current overall rating was confirmed in the research behind this article, so advisers should consult the Global Forum ratings portal directly for the round-2 result.
Listing Timeline: A History of Inclusions, Commitments, and Delistings
The record across all three systems is short and now resolved, save for the OECD substance note.
- October 2018: FATF grey-listed the country; action plan agreed.
- November 2020: ICRG on-site visit conducted.
- December 2020: FATF removed it from increased monitoring.
- 4 October 2022: Added to the EU Annex I blacklist.
- 20 February 2024 (effective 26 February 2024): Fully removed from Annex I, not moved to Annex II.
- February 2024: FHTP flagged the country for focused monitoring on substance.
- 17 February 2026: Latest EU update; the country remains off both annexes.
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Specific Deficiencies Cited and the Action Plans Behind Them
The two formal listings rested on different grounds. FATF's 2018 designation concerned strategic AML/CFT weaknesses identified in the Mutual Evaluation Report, and its 2020 exit statement confirmed those had been addressed through the agreed action plan.
The detailed action-plan line items are referenced on the FATF country page rather than reproduced here; the FATF country page and the CFATF follow-up report are the authoritative sources for the technical-compliance progress.
The EU listing rested on tax substance, not AML. The Council cited the facilitation of offshore structures aimed at booking profits without real economic activity, a concern tied to the OECD BEPS Action 5 substance standard for NTJs. The same substance theme underlies the FHTP's 2024 focused-monitoring note, though the specific sub-items were not publicly detailed.
Practical Consequences: Enhanced Due Diligence and Correspondent Banking Friction
A listing reaches a foreign owner mainly through banking. While the country sat on the FATF grey list and later the EU blacklist, correspondent banks applied enhanced due diligence to respondent institutions, slowing or sometimes blocking routine cross-border wires and pushing some banks to de-risk.
Other effects followed the same pattern. Trade finance instruments such as letters of credit and guarantees drew heavier scrutiny and higher costs, and many fund managers and institutional investors operate internal policies that restrict exposure to listed jurisdictions.
EU defensive tax measures bit directly. Luxembourg's income tax law, for instance, denies deduction of interest and royalties paid to entities in EU-blacklisted jurisdictions, applying the blacklist version in force on 1 January of each year, so a Bahamian counterparty became more expensive to deal with for some EU payers.
Those frictions unwind after delisting, though not instantly. FATF guidance is explicit that a grey-list status does not by itself mandate enhanced due diligence, yet banks in major centres run risk-based programmes that weigh any FATF declaration of strategic deficiencies, so banking access recovers as confidence returns rather than overnight.
Investor and Adviser Perception of a Listed or Recently Delisted Bahamas
Reputation lags the formal record. A delisting clears the legal status, but sophisticated due-diligence teams remember the period under monitoring and continue to probe substance and AML controls for a time afterward.
The FHTP focused-monitoring flag is the practical reason to keep watching. It signals to institutional reviewers that economic-substance compliance for NTJ entities deserves attention, even though it is not a formal grey or black listing.
Read the absence of a listing carefully. Clearance from the FATF and EU lists is a meaningful positive, but it is not a clean bill of health on its own; conversely, some jurisdictions that have never been listed still carry real risk, and a competent adviser assesses the underlying controls rather than the label alone.
Current Standing and Outlook Across All Lists
The jurisdiction carries no formal grey or black listing on any of the bodies that matter for incorporation or banking. The single residual marker is the OECD FHTP focused-monitoring note on substance.
| Body | List | Status | Effective date |
|---|---|---|---|
| FATF | Black list | Not listed | Never listed |
| FATF | Grey list | Not listed | Delisted December 2020 |
| EU | Annex I (blacklist) | Not listed | Delisted 20 Feb 2024 |
| EU | Annex II (greylist) | Not listed | Never placed |
| OECD FHTP | NTJ substance monitoring | Focused monitoring flagged | 2024 annual review |
| OECD Global Forum | EOIR rating | Check OECD portal | — |
Two review cycles are worth tracking for any change. The EU list is revised twice a year, with the next revision after February 2026 scheduled for October 2026, while FATF publishes updated lists three times a year after its February, June, and October plenaries.
Conclusion
For a foreign owner, the practical message is straightforward: the country sits clean across the FATF and EU watchlists, and the banking and tax frictions that came with its earlier listings have unwound. The one item still warranting attention is the OECD substance flag, which means an entity should be able to show genuine economic activity matching its profits. Build that substance into the structure from the start, and keep an eye on the biannual EU and triannual FATF cycles so any future shift does not catch you unprepared. Treated as a live compliance matter rather than a settled one, watchlist status need not stand in the way of incorporating or maintaining a company there.
How Expanship Can Help Your Business in The Bahamas
Expanship advises non-resident owners on watchlist status and what it means for banking, counterparty due diligence, and substance, then handles the wider work of forming and running a compliant entity in the jurisdiction. Our support covers the full lifecycle of a foreign-owned company, from formation through ongoing filings.
- Company incorporation and structuring
- Registered agent and registered office
- Tax registration and filing
- Ongoing compliance and substance management
- Accounting and bookkeeping
- Introductions to banking partners
To discuss your situation, contact Expanship Bahamas.
Frequently Asked Questions
No. The country was removed from the FATF grey list in December 2020 and has never appeared on the black list, which names only North Korea, Iran, and Myanmar. It remains a member of the regional body CFATF and continues working on its AML/CFT regime.
No. It was added to the EU Annex I blacklist on 4 October 2022 and fully removed on 20 February 2024, effective 26 February 2024. It was not moved to the Annex II grey list, and it remains off both annexes following the February 2026 update.
The Council listed it for facilitating offshore structures and arrangements aimed at attracting profits without real economic substance, a concern tied to OECD BEPS Action 5 substance standards. The country addressed the issue and was delisted within about 16 months.
In its 2024 review of no-or-only-nominal-tax jurisdictions, the OECD Forum on Harmful Tax Practices identified the country as one of four needing focused monitoring on economic substance. It is not a formal grey or black listing, but institutional reviewers watch it, so an entity should be prepared to demonstrate real activity.
While a jurisdiction is listed, correspondent banks apply enhanced due diligence, slowing or blocking cross-border wires and sometimes de-risking entirely. Those effects ease after delisting as banking access and investor confidence recover, though the recovery is gradual rather than immediate.
The EU revises its list twice a year, with the next revision after February 2026 set for October 2026. FATF publishes updates three times a year, following its February, June, and October plenary sessions.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
