Bob Gains Webshop Deposit ‘Clearance’


Tribune Business Editor


Bank of the Bahamas yesterday confirmed it had received “clearance” from its US correspondent bank to accept deposits from a legalised webshop gaming industry, thus clearing a major obstacle to achieving a key Government policy objective.

Paul McWeeney, the BISX-listed institution’s managing director, told Tribune Business that JP Morgan Chase, one of the world’s largest financial institutions, had given its approval for Bank of the Bahamas to accept web shop industry funds.

“We got our correspondent bank, JP Morgan Chase, to give us clearance on it,” Mr McWeeney said. “I know we got the arrangement cleared.”

He conceded though, that greater attention would have to be paid to transactions involving gaming, given that the industry worldwide - not just in the Bahamas - was perceived to have a “heightened” money laundering risk.

“What is paramount is adhering to the anti-money laundering and compliance standards,” Mr McWeeney explained. “That’s important for everything in the normal course of business, but the heightened risk of that industry [webshop gaming] requires a great deal of attention from a compliance standpoint.”

Mr McWeeney’s confirmation that Bank of the Bahamas has been given approval to conduct business with legalised web shops by its main US correspondent bank clears a significant hurdle for both the sector and the Government.

A major policy objective for the Christie administration in legalising the domestic web shop industry is to ensure the multi-million dollar funds it generates can be accepted into the formal Bahamian commercial banking system.

With the legality of web shop gaming ‘in question’ prior to the new Gaming Act’s passage into law, Bahamian banks had refused to transact businesses with web shops or accept their funds.

This had the effect of creating a ‘parallel banking system’, as web shops sought other avenues to obtain returns on their revenues and profits.

The result was an ‘informal economy’ where web shops were issuing mortgages and other loans, and investing in productive sectors of the economy such as real estate.

To address this, and the potential weaknesses this created in the Bahamas’ anti-money laundering regime, the Government was ‘banking’ on legalisation opening the financial industry’s doors to licensed web shop operators.

However, this objective ran into an immediate roadblock as a result of the commercial banking industry’s resistance to accepting web shop deposits.

All three Canadian-owned banks - Royal Bank of Canada (RBC), CIBC FirstCaribbean and Scotiabank - said worldwide guidelines prevented them from accepting funds related to Internet gaming.

And the Bahamian-owned institutions, Commonwealth Bank and Fidelity Bank (Bahamas), have both indicated they are not interested in having web shops as clients due to fears they would lose their correspondent banking relationships, and be cut off from the US financial system.

But yesterday’s disclosure by Bank of the Bahamas effectively breaches this resistance, and will give legalised web shops a way to access both the domestic and global financial systems.

Some cynics, though, are likely to suggest that the Government has used its 65 per cent majority shareholding in Bank of the Bahamas to ‘pressure’ its Board, and management, to accept web shop deposits.

They will argue that the Government has sacrificed the bank’s interests, and those of the 35 per cent minority shareholders, to achieve its policy objectives for the domestic gaming industry.

However, Alfred Sears QC, attorney for the Gaming House Operators Association, yesterday questioned why Bahamas-based commercial banks were so reluctant to do business with legalised web shop operators when the latter were required to adhere to the same anti-money laundering and Know Your Customer (KYC) standards.

Suggesting that a ‘double standard’ was in play, Mr Sears said there was “a disconnect” between the banks and their rationale for not accepting web shop deposits.

Questioning how the banks could accept if domestic gaming operators where matching their KYC standards, he added: “It’s not adding up to me.”

“Some of the gaming operators have put in place the same quality of governance as the banks themselves,” Mr Sears told Tribune Business, “It’s ironic. Some of the directors of those companies are also on the same banks.”

Hailing JP Morgan’s decision to provide “clearance” for Bank of the Bahamas, the former attorney general queried why there would be a problem if the web shop industry matched the banks’ anti-money laundering standards.

And Mr Sears pointed to efforts by web shop operators to enhance their corporate governance structures and ‘professionalise’ their Boards ahead of legalisation and regulation.

Island Luck’s Board, for example, contains both Julian Francis, the ex-Central Bank governor, and Barry Malcolm, former Scotiabank (Bahamas) managing director, as directors.

“The gaming house operators have established structures which are equal or comparable to the same governance structures of the banks themselves in terms of the quality of people,” Mr Sears told Tribune Business.

“There is a disconnect in this public conversation. What is there to object to? If the industry has the same governance structures, and is obliged to have the same KYC, the same anti-money laundering obligations, the same proceeds of crime obligations, why would there be an outright rejection?

“It’s not adding up to me. This is a more complex issue than the public conversation is allowing.”


birdiestrachan 5 years, 4 months ago

Mr.: Alfred Sears in a brilliant man. The Bahamas should be proud to have him as a son of the soil. accepting these deposits is good for the BOB.


ThisIsOurs 5 years, 4 months ago

I wonder if that pesky US INDICTMENT for human smuggling is cleared up as yet....wonder how much money the human smuggling business generates annually... I guess we're all aware of the tremendous financial burden human smuggling is putting on our schools, hospitals and immigration services. But hey, what's there to think about? Money makin'!


Well_mudda_take_sic 5 years, 4 months ago

Criminals are criminals no matter how much sugar coating is applied to them by their aiders and abettors ....... I suspect J P Morgan will soon learn the other side of the story fed to it by the likes of McQueeney and Sears. As for the others named in the article who have traded their reputations to satisfy their own personal greed and thirst for money no matter what the source of it, they will eventually pay the dearest of all prices for the serious flaws in their character now made public for all to see.


Well_mudda_take_sic 5 years, 4 months ago

WELL WORTH REPEATING: The pocket book of Mr. Sears has been well stuffed by the racketeering numbers bosses for the role he has gingerly played in representing the interests of these criminals. In his youth Mr. Sears showed a great penchant for venturing on very misguided paths of one kind or another and it seems he has had a serious relapse in that regard. This relapse was no doubt caused by a faulty moral compass that was never truly fixed notwithstanding all the help he has received in life to try keep him on the right track. They say only a thug ever truly understands and appreciates another thug as this demands a very convoluted and warped rationalization process ....something like birds of a feather tend to flock together.


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