The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Grand Bahama Chamber of Commerce’s president yesterday asserted that the Gaming Act 2014 should be revisited and, if necessary, amended to ensure that the sector does not imperil the country’s already fragile banking sector.

Kevin Seymour, in a review of the International Monetary Fund’s (IMF) Staff Report - Article IV Consultation on The Bahamas, said that recent concerns expressed by Central Bank Governor John Rolle should be taken seriously by the government.

During a recent address made to the Bahamas Chamber of Commerce and Employers Confederation, the Governor of the Central Bank of The Bahamas stated that “overlooking the need for more stringent regulations in the web shop sector could, in time, increase the possibility of local bank de-risking.” Mr Rolle went on to explain that he was becoming increasingly concerned over the source of funds entering the gaming industry, asserting that more regulations would be needed to assure regulatory agencies of the sector’s legitimacy.

Mr Seymour told Tribune Business: “It would appear that certainly there are still banks, even after the passage of the Gaming Act, who are not accepting funds from these web shops. That is a matter of internal policy for the respective banks. The question then needs to be asked and in light of the concerns raised by the Governor, whether or not the due diligence carried out by the Gaming Board was sufficiently robust to meet the requirements of local banks.

“It would appear that the answer to that is no because they are still not accepting those funds. When you put that in the context of the overall de-risking initiative, it would be quite easy to identify with the comments made by the Governor because under the de-risking approach they are really promoting a risk-based approach to money laundering etc. High on the scale would be web shops who, up to the time that they were legalised, were basically amassing huge amounts of funds which because it was from an illegal activity at the time would be tainted. The question is what did they do with those funds. The business community has not received a satisfactory answer from government on exactly how they propose to deal with this issue.”

The IMF’s recent analysis found that while Bahamian institutions have come under greater scrutiny from their correspondents, there has been “temporary disruption” in only a few instances. “Financial institutions in the Bahamas have experienced additional scrutiny of their correspondent banking relationships, although only in a few cases has this resulted in temporary disruptions of correspondent banking services,” the IMF said. “Five financial institutions (representing about 19 per cent of the assets of the banking system) have recently lost one or more correspondent banking relationships.

“The alarm bells should be ringing because what a lot of Bahamians do not understand about this de-risking initiative is that if you have correspondent banks starting to cut off their relationships with local banks that means that any sort of international transactions that we are looking to participate in diminishes. If that is the case, if you have a situation where your banking is not really working like banking systems in the developed countries and your ability to attract foreign direct investment is diminished. People really need to pay attention to this,” Mr Seymour said.