By RICARDO WELLS
Tribune Staff Reporter
CENTRAL Bank Governor John Rolle yesterday said overlooking the need for more stringent regulations in the web shop sector could, in time, increase the possibility of local bank de-risking.
Addressing members of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), Mr Rolle said 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.
According to Mr Rolle, speculation surrounding the sources of the large financial gains of web shop operators could lead international financial institutions to question all financial institutions in the Bahamas and, as a result, hasten their “de-risking”.
According to Mr Rolle, the lack of clarification over where funds are coming from can force foreign banks to consider the process of “de-risking” local institutions out of fear that illegal funds are involved at some point in the banking process.
Hence, he called for the establishment of regulations to maintain the separation between legitimate and illegitimate sources of funding in the industry.
“I am not concerned about whether the capacity exists (to determine how funds from the web shop industry are used); what is more important is now that you have the gambling side legal, some of what you see continues to be a symptom of (forced) integration into the economy,” he said.
Correspondent banks are those foreign entities that allow Bahamian financial institutions to provide services in their own 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.
The government, through the Office of the Attorney General, has initiated a “task force” of regulators to ensure that local institutions that depend on foreign correspondent banks have identified any and all possible flaws that they might have.
On Tuesday, Abhilash Bhachech, the Central Bank’s inspector of banks and trust companies, revealed that the regulator’s first correspondent bank ‘de-risk’ survey showed that while the impact was not systemic, relationships enjoyed by Bahamas-based financial institutions were either subject to greater scrutiny or being reduced.
The concept of bank “de-risking” was first employed to offset money-laundering mechanisms throughout the world.
Mr Rolle has recommended that local institutions ensure that their relationships with their correspondent counterparts were strong, even going as far as to suggest that they begin to search out a “back-up plan” in the event that correspondent banks opt to carry out “de-risking” here.