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Governor To ‘Bridge Gap’ Between Banks, Web Shops

John Rolle, Governor of the Central Bank

John Rolle, Governor of the Central Bank

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John Rolle

The Central Bank’s governor has reaffirmed his commitment to “bridge the gap” between the commercial banking industry and web shop operators, and help ease his licensees’ compliance concerns.

John Rolle praised the quality of the web shops’ electronic monitoring systems, suggesting they were good enough to facilitate the exchange of Know Your Customer (KYC) information on their clients with the banks.

Speaking at a Friday press conference that was called to address correspondent bank ‘de-risking’, and its impact on the Bahamas, he added that the ability of web shops to track client winnings showed “how good their systems are”.

The Central Bank governor said this created the potential for integrating commercial bank and web shop IT platforms, so that the financial services industry could track and trace funds moving through the latter.

“We’d like to bridge the gap in terms of business platforms between the two sectors, so we don’t have gaps in the movement of funds from that sector to the financial sector,” Mr Rolle said.

He was responding after being asked by Tribune Business whether the increasing tendency of large global banks to terminate their correspondent relationships with institutions in the Bahamas and other countries would make it more difficult for the local commercial banking industry to accept web shop deposits.

All Bahamas-based commercial banks, apart from the Government-owned Bank of the Bahamas, are refusing to do business with web shops, citing either their parent’s global policies or the ‘high risk’ nature that the sector poses.

Web shop gaming operators have only recently been legalised, and have yet to receive their full licenses. Their previously unlawful status, and cash-intensive business nature, underpin the commercial banking industry’s concerns.

Sectors that generate large volumes, and amounts, of cash are seen as being more vulnerable to abuse and exploitation by criminal elements for a variety of financial crimes, including money laundering.

Given that perceived money laundering risks are one of the most frequently cited causes for global banks to terminate correspondent relationships with their Bahamian counterparts, this has only served to make local institutions even more wary about conducting business with the web shops.

Yet such concerns, which are being exacerbated by global correspondent banking trends, are conspiring to defeat a key Government policy goal that was behind the decision to legalise, tax and regulate web shop gaming.

This was to bring the industry out of the ‘informal’ economy into the formal sector and, most importantly, to bring the multi-million dollar sums recycled by the web shops into the proper banking and financial system.

The reluctance of Bahamian commercial banks to accept web shop business is thus defeating this objective. And it is also impacting a key element of the Central Bank’s defence strategy against correspondent relationship terminations.

Mr Rolle said the Central Bank was seeking to promote the increased use of electronic payments, so that companies could “pivot” away from reliance on cash-based transactions.

He added that the regulator was also “trying to promote more financial inclusion”. This, the Governor explained, was intended “to provide the highest number of customers with access to the formal banking system”.

With the web shops almost totally excluded, that goal is not being met.

Mr Rolle emphasised that the prevalence of web shop gaming in this nation “is not the reason why the Bahamas is experiencing the level of de-risking that it is now”.

However, he acknowledged that commercial banks tended to perceive industries and businesses that typically generated “high value cash” transactions - such as web shops - of being a greater risk in terms of money laundering and other financial abuses.

“It could cause financial institutions not to want to take on that type of business,” the Central Bank governor acknowledged.

He also pointed to the global policies of the three Canadian-owned banks - Royal Bank of Canada (RBC), CIBC FirstCaribbean and Scotiabank - not to accept monies derived from casinos or any form of gaming (including the Internet).

Several sources, though, have suggested that these policies have been ‘waived’ in the Bahamas when it comes to accepting deposits from Atlantis and other local casinos.

This has led to claims that the commercial banks are discriminating against Bahamian-owned businesses, and calls for the web shop industry to establish their own bank or credit union. Wayne Munroe QC was the latest to make this argument last week.

Still, Mr Rolle indicated that the Central Bank is focused on bringing the commercial bank and web shop industries together, largely through increasing the former’s understanding of the KYC and due diligence systems employed by local gaming houses.

“We see opportunities in the Bahamas, given the quality of operations in the web shops and quality of electronic monitoring of the web shops, for a framework for the exchange of information from the web shop industry so we can audit and track transactions,” Mr Rolle said.

“This is so financial institutions that bank these operations can trace fully the source of funds from them.”

Mr Rolle added that it was “possible to have tracing and auditing of the winnings” earned by individual Bahamians from their web shop gaming activities.

He said these winnings were already being deposited by these persons in their accounts with commercial banks.

“There can be, with a little bit of tweaking, an audit trail from the operator to follow these winnings,” the Governor said. “This is how good the systems are in web shops.”

Comments

MonkeeDoo 1 year, 8 months ago

Oh well of course. All Commercial Banks should just jump on the John-Rolle train and go down with the rest of us. Does Mr. Rolle think that these decisions are made at a local level ? Like the branch manager decides who can come and who can go. This is the same Mr. Rolle who thinks that all is well at Bank of Bahamas. Any minute now our Central Bank will have its correspondent relationships shut down with that kind of stupid talk.

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The_Oracle 1 year, 8 months ago

Trying like hell to legitimize the illegitimate. Sellout.

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banker 1 year, 8 months ago

What Kool Aid has Rolle been drinking? He will never bridge the gap. This jurisdiction already has problems with poor enforcement, a history of white collar financial perfidy (Warren Davis, Julian Brown, Owen Bethel, Tremblay, Calendonia, Gibraltar etc) and having vast amounts of monies, transferred electronically is not going to give any REAL institution the warm and fuzzies in taking web shop money. The man needs a reality pill. I for one, would like to see a politically-independent Central Bank governor who is a Bahamian patriot and not a political lapdog.

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Well_mudda_take_sic 1 year, 8 months ago

John Rolle knows full well that the key issue here for the foreign banks that provide our local banks with vital correspondent banking relationships is Crooked Christie's effort to 'legalize' the criminal racketerring activities of the web shop enterprises run by the numbers bosses like Sebas Bastian and Craig Flowers. The only real reason why The Bahamas is now subject to an increased level of 'de-risking' by correspondent banks is Crooked Christie's defiance of the wishes of the Bahamian people (as expressed in a duly held national referendum paid for by the Bahamian people) that the criminal racketeering activities of the web shop enterprises not be 'legalized'. The Bahamian people all along knew, and Crooked Christie surely knew or ought to have known, that the international banking community would never accept such foolishness. John Rolle, like Wendy Craigg before him, is nothing more than a puppet of Crooked Christie who is afraid to do or say what is right and demanded by his statutorily mandated fiduciary duties to the Bahamian people as Governor of The Central Bank. He, like Wendy Craigg, lacks the backbone necessary to avoid the Central Bank being nothing more than a political tool of Crooked Christie as Minister of Finance. Small wonder too that the Bank of The Bahamas debacle caused by fraud and corruption run amok is rapidly escalating into one of the most costly political fiascos the Bahamas has ever seen with a serious knock on effect for the bankruptcy of the National Insurance Fund.

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Groidal 1 year, 8 months ago

Yes, naturally the banks all are excited about accepting people smuggling and gun running funds in their accounts! What could possibly go wrong?

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TalRussell 1 year, 8 months ago

Comrades! The Web Shops Bosses should turn their asses in the complete opposite direction when the Central Bank's governor comes a calling, cause it has the potential for integrating the Numbers Bosses well organized businesses up with the financially troubled and heading towards a financial platform tsunami that the same governor should have be rung-ins the warning bells against the well publicized questionable lending practices applied toward the "politically connected," by the Bank of Bahamaland.
Maybe they need ask the governor, if all cash on deposit at BOB for commercial accounts are 100% insured against any risk financial loses?

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Honestman 1 year, 8 months ago

John Rolle is fighting a losing battle here. Foreign banks will NOT allow the Web Shops to bank with them. If it ends up that only BoB decides to accept web shop money then foreign banks will end up not accepting any cheques drawn on BoB. Or am I missing something?

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BahamaPundit 1 year, 8 months ago

Mr. Rolle needs a vacation to the US or Europe to get his head around how first world countries are run. They don't have time for foolishness. A bunch of island thugs that open some coin machines does not interest multinational banks in the least. Get out from underneath your stone Mr. Rolle and see how the real world works.

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alfalfa 1 year, 8 months ago

Is John Rolle going to re-negotiate correspondent banking agreements for the Banks that will lose them if they accept this "so called legal money". The large majority of our local clearing banks are owned by, or are locally incorporated assets of foreign Banks and do not have the authority to make a decision as to whether or not they can accept these questionable "numbers" deposits. No large bank is going to risk losing their international affiliations in order to accept funds which are illegal and were only made "legal" by the PM after being voted down by a referendum. Maybe the Central Bank can restructure itself to accept these deposits. Then the numbers boys will have their own Bank.

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GrassRoot 1 year, 8 months ago

Statements like the one of the Governor are a reflection of a thoroughly corrupted system. I am not saying the Governor is corrupt, but it shows that the dark side has so much influence by simple means of cash at hand to erode the government, the whole of the public servant body and attack legitimate businesses. The anything goes and catch-me-if -you-can mentality of influential groups in the Bahamas will throw this lovely country further back. Open eyed. We just had our Atlantis with the Baha Mar, what else does the Bahamian People need to see that this country is right at the abyss.

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BMW 1 year, 7 months ago

If you cant dazzle them with brilliance you baffle them with bullshit. Thats all he is talking. Rolle and the rest of them really need to get out into the world and see how first world countries operate.

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