The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading businessman has warned that the level of due diligence required to open a bank account in the Bahamas is having “serious consequences” for the Bahamas’ attempts to position itself as an international business centre.

Franklyn Wilson spoke to Tribune Business on the same day he met with a London-based attorney who had “given up” on ambitions to do business in the Bahamas because of the time, and difficulties, encountered in trying to open a bank account here.

Urging the Central Bank of the Bahamas and other regulators to assess whether the Know Your Customer (KYC) standards they were demanding exceeded international best practices, the Arawak Homes chairman said the issue was working to this nation’s “detriment as a jurisdiction”.

Questioning whether the Bahamas was operating on a KYC ‘level playing field’, Mr Wilson told Tribune Business: “I continually hear local and international businessmen make comments on an issue that concerns me: How difficult it is to do banking business in the Bahamas.

“I saw someone in New York walk into a bank there and open an account in minutes. I’ve heard stories of people doing similar things in Miami, London and all over the world, but to open a bank account in the Bahamas you have to take every piece of paper, and show who your grandfather, grandmother and aunt were.”

The Sunshine Holdings chairman added: “The level of due diligence was amazing. It seems to me the regulators have to make sure they are not demanding of the banks a level of care and attention that is far in excess of what is required of competitors in other nations, to the detriment of our jurisdiction.”

Mr Wilson’s concern is one that has been repeatedly aired over the past 13 years, namely that the level of KYC due diligence that banks and financial institutions are required to do before opening accounts for new customers is costing the Bahamas’ business.

Although modified several times over the years, amid indications that the regulators were adopting a more risk-based approach to KYC, the Bahamas’ customer due diligence laws stem from the enhancements made to ensure this nation escaped the Financial Action Task Force’s (FATF) money laundering ‘blacklist’.

Giving a practical example of the difficulties still being created, Mr Wilson told Tribune Business: “I met with a gentleman today who is an attorney in London. He wanted to do business in the Bahamas, and he just gave up. The time and the process is such that he is just not used to it – the level of detail required and what they need to know.”

Bank accounts are an essential prerequisite for businesses to engage in standard commercial transactions. But Mr Wilson said newly-formed companies were being asked by Bahamian financial institutions to estimate how many transactions would go through their prospective account in a month – something that was impossible for them to know.

The leading businessman suggested that those making the KYC rules, such as the FATF and G-7 group of leading industrialized nations, may be “asking more of us” than they were of their own financial institutions and home countries.

“These things are not without serious consequences,” Mr Wilson told Tribune Business. “It may be a sign that someone, somewhere is being unfair to jurisdictions like the Bahamas.”

As a case in point, he referred to his former profession, accounting, and the seeming lack of growth at the so-called ‘Big Four’ firms over the past 25 years.

“It appears there’s been little, if any, growth,” he said, “if not net decline.” Mr Wilson said Deloitte & Touche had six partners when he was there, a number that he felt was less today.

As for PricewaterhouseCoopers (PwC), Mr Wilson said that when it was two separate firms, Pricewaterhouse and Coopers & Lybrand both had three-four partners.

That, he added, suggested it should have about eight partners today. Yet this was not the case.

“When faced with facts like these, one has to ask real questions as to what is happening,” Mr Wilson said.