Bank: Correspondent pull back vindicates web shop refusal


Tribune Business Editor


Commonwealth Bank’s president yesterday said the increasing ‘pull back’ by correspondent banks from the Caribbean had vindicated its decision not to accept web shop industry deposits.

Ian Jennings told Tribune Business that the BISX-listed institution’s relationship with its international counterparts would have been “endangered” had it agreed to do business with the newly-legalised sector.

Emphasising that Commonwealth Bank’s main correspondent banking partner had a “very strong policy” against accepting gaming industry monies, Mr Jennings indicated this relationship would have been severely strained - especially in the current ‘de-risking’ climate - had it ‘gambled’ over the web shops.

“This is one of the reasons we gave back in the [gaming] referendum time as to why Commonwealth Bank would not bank the web shops because of the correspondents. That’s still our position,” Mr Jennings told Tribune Business of the correspondent industry’s growing withdrawal from the Caribbean.

His comments indicate that the growing correspondent banking pressures mean there is little to no possibility of any Bahamas-based commercial banks, apart from Bank of the Bahamas, accepting deposits - and doing any kind of business - with the web shop industry in the near future.

No institution will want to jeopardise its correspondent banking relationships, and risk being cut off from the global financial system, for one set of clients, especially given the ‘de-risking’ environment.

But, as Tribune Business has repeatedly pointed out, this undermines one of the Government’s main objectives behind legalising web shop gaming, namely to get the multi-million dollar sums generated by the industry into the banking system and formal economy.

The Commonwealth Bank chief, meanwhile, described the increasing correspondent withdrawal trend as “a very big issue” for not just the Bahamas, but the region as a whole, adding that it had the potential to “destabilise” not just the financial services sector but whole economies.

He added that the US government, in the form of the Treasury Department, was “not quite equipped to deal with it” because it had little to no influence over privately-owned banks’ decisions to sever correspondent banking relationships with this region.

While Commonwealth Bank had not been impacted by this trend, Mr Jennings told Tribune Business: “It’s [growing] into what could potentially be a destabilising influence in the Caribbean.

“We are doing everything we can to meet the requirements our correspondents set out, but we are concerned as far as the long-term position of the banks.

“One would have to think it would be a fairly incredible scenario for no correspondent banking relationships to be maintained with a particular country.”

Yet Belize is in just such a position, and should the Bahamas ever suffer the same fate, it would be catastrophic for an economy totally reliant on services exports, financial services, and international commerce and trade for its survival.

Correspondent banks are those that allow Bahamian financial institutions to provide services in their home countries, using their physical and electronic banking infrastructures.

They give Bahamian banks, and their clients, access to the international capital markets and financial system, enabling transactions to clear and be settled on a timely basis, and foreign currency deposits to be taken.

Foreign correspondent banks thus provide the key gateway to the world economy and financial system, an access that is now being threatened region-wide.

“We are concerned about it, but we are optimistic that wiser heads will prevail,” Mr Jennings said of the current situation. “Where correspondents have indicated their issues to us, we are doing everything to meet their requirements.”

Referring again to the web shops, he told Tribune Business: “It’s a difficult situation, but we have to say there are certain types of business we will not entertain, as it will endanger our relationships with correspondent banks and impact the services we offer to all-comers, not just a select few.

“That was the whole premise of us declining to do business with web shops, which was the position of our correspondent - the primary correspondent in the region for banks.

“They have a very strong position internally on banking gaming. We went through a process with them to review our relationship, and they made a decision to continue to serve us,” Mr Jennings continued.

“We’re not anticipating any change in our stance on banking the web shop industry at this time.”

The Bahamas is already feeling the impact from the correspondent bank ‘de-risking’ trend. A Central Bank of the Bahamas survey, published in January 2016, acknowledged that local institutions were being subjected to “heightened due diligence” by their US correspondent counterparts.

Abhilash Bhachech, the Central Bank’s inspector of banks and trust companies, said: “In sum, the results indicated ‘de-risking’ of global correspondent banks has mainly impacted local commercial banks and standalone international banks.

“While the impact does not appear to be systemic, the bank has observed several instances of scrutiny and/or downsizing of correspondent relationships initiated both locally and internationally.

“For example, while four banks reported having a correspondent banking relationship terminated, all were able to find replacements. However, the level of difficulty or ease with which they were able to replace their correspondent bank was due in part to the nature of their operations, as well as the foreign correspondent bank’s onboarding requirements.”

Mr Bhachech added: “A small number of banks confirmed that de-risking has had an adverse impact on their operations, and an even smaller number has advised that this has had an impact on their remittance services.

“In the event of a withdrawal of a correspondent bank, 15 banks (or 30 per cent) indicated that they had a contingency plan in place for its replacement.

“Thirty-five banks indicated they had no contingency plan in place.”

The Central Bank received 53 responses from the 97 public banks and trust companies that it sent the correspondent banking survey to.


John 6 years, 3 months ago

Yet these same correspondent banks accept money from Las Vegas Atlantic City and Atlantis And if they refuse they will face lawsuits. No matter how you look at it still discrimination. But after all who owns the central banks of the world?


MonkeeDoo 6 years, 3 months ago

John: When you can't buy on Anazon because the banks and credit cards are shut down come back and talk your talk ! Big Shot !


MonkeeDoo 6 years, 3 months ago

Bahamians are just too stupid. Amd it starts with the Govt


Well_mudda_take_sic 6 years, 3 months ago

We can lay this problem at the door step of Christie, Wilchcombe, Halkitis, Davis, Sears, the Wicked Witch and others like them. These corrupt greedy political animals just could not resist tapping into the ill-gotten gains of the racketeering numbers bosses (like Craig Flowers and Sebas Bastian) who run a vast network of criminal activities associated with their corrupt gaming web shops. Both lamed brain greedy Christie and the asinine Wicked Witch of the West just refused to accept the very basic premise that the Bahamas had no justifiable means by which it could legalize criminal activities or erase the records of known criminals in the eyes of the global financial community and the banking regulators of the developed countries.


Well_mudda_take_sic 6 years, 3 months ago

Christie and the corrupt PLP government that he leads need to understand that the Bahamas can have all of the right laws on paper for financial institutions domiciled and regulated in the Bahamas to be allowed to participate in the international financial system, but these laws mean nothing unless they can be and are enforced without exception. Our government sent the wrong message to the international banking community when it outrightly defied the wishes of the Bahamian people as expressed in a duly held national referendum and passed laws to wrongfully protect and endeavour to legitimize the illegal racketeering activities of the gaming web shops run by well known criminals like Craig Flowers and Sebas Bastian. Small wonder many of the financial institutions operating in and from within our country today are having great difficulty in establishing and/or maintaining necessary correspondent banking relationships with financial institutions domiciled in and regulated by the world's developed countries. And the feeble minded greedy twits within our government simply do not understand why China will never be able to protect us from the disastrous implications of being cutoff from the dollar based international financial system. The Bahamas will not be the first lesser developed country driven to ruination by the small minds of its greedy corrupt politicians - recent history, especially the last 50 years, is littered with examples of such failed countries!


aldo 6 years, 3 months ago

With appropriate and integrated gambling and AML/CFT regulation for Webshops the government and its regulatory agencies could have provided a better defensive position. However, we are told that when seeking consultants it went to the USA (where Webshop type gambling is illegal), South Africa (where Webshop type gambling is illegal), and the UK which has had many problems and amendments since legalising Webshop type gambling in that country and no experience in dealing with internet gambling and AML/CFT and banks in non-G20 countries.

It is not good enough to get consultants able to cut & paste laws without understanding specific needs. When sweetheart deals are done with sweetheart consultants then the outcome cannot be what's needed for the country and its industry.


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