Investors: RBC account closures 'utter nonsense'

As of Monday, December 4, 2017

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Furious expatriates have slammed Royal Bank of Canada's (RBC) closure of their accounts without warning as "utter nonsense", amid fears it could harm the Bahamas' reputation and second homeowner economies.

Tribune Business can reveal that winter residents and second homeowners, together with condo associations and others, have been unable to access funds amounting to thousands of dollars after they never received RBC letters and e-mails requesting they provide new Know Your Customer (KYC) information. RBC subsequently closed their accounts after the verification deadline was missed, yet many beneficial owners only became aware several months later when they were unable to access their funds.

Derek Hare, a world-renowned landscape and marine artist, whose work - including scenes of the Bahamas - has been purchased by royalty in both the UK and Dubai, told Tribune Business he had been unable to either re-open his account or retrieve the funds in it after discovering its closure more than a month ago. Mr Hare, a 30-year RBC customer and UK citizen, who owns a condo in Abaco's Treasure Cay and typically spends two-three months per year in the Bahamas, said he had provided the bank with updated KYC details just two-three years ago.

He added that his efforts to resolve the issue, both with RBC in the Bahamas and its Trinidad-based call centre, had proven fruitless to-date with his inquiries producing no reply.

Mr Hare said expatriate friends in Treasure Cay had been unable to access sums ranging from $10,000 to $15,000 in accounts that were now closed, with the problem also involving Nassau-based residents - some of whom have "been here for generations". He added that condominium associations had also seen their corporate accounts closed by RBC without warning.

Besides the reputational fall-out, Mr Hare expressed concern about the impact the situation would have on Bahamian workers and companies reliant on business generated by second homeowners and winter residents.

"Many condo association or resort accounts, for example, used to pay gardeners, pool cleaners, management etc, not to mention any ongoing maintenance jobs where the individuals are dependent on this regular income, are no longer operational," Mr Hare told Tribune Business.

"This type of situation, where the income for many people is generated largely by non-Bahamians, must be very widespread and the consequences of RBC's actions will affect those Bahamians most likely to suffer considerable hardship as a result of not being able to get paid."

Nathaniel Beneby, RBC's managing director for the Bahamas and northern Caribbean, told Tribune Business the bank was "working through" issues associated with the failure of some clients to provide the requested KYC information by the bank's deadline.

He indicated that the problem related to persons who did not have "significant economic ties" to the Bahamas, such as owning a business or local real estate, but promised that the bank was addressing each case once contacted by the relevant client.

Emphasising that the money in affected accounts was safe, Mr Beneby said: "That has more to do with clients conducting accounts here in the Bahamas who don't have any economic ties to the country.

"It's more around compliance and KYC risk. We did send out a notification to the last known address of those clients, and have been receiving feedback from clients who did not receive their's.

"There were deadlines to provide us with the information we requested. Where the deadlines were not met, we closed the account, and as customers contact us we are working through to regularise the situation," the RBC chief continued.

"We are working through that. In these cases, we are working through with the clients once they contact us. It's more those clients with no ties here at all, no business relationship."

Mr Hare told Tribune Business he had learnt RBC sent out notifications in June to non-Bahamian account holders, listing KYC and customer due diligence information requests that had to be complied with.

"Nobody received the letter they sent," he said. "One person, who has lost $15,000 at the moment, they told him: 'Oh no, we didn't send you a letter; we sent you an e-mail'. He told them: 'I don't turn on a computer'.

"This is really utter nonsense and quite alarming. It's just quite extraordinary this whole thing. I discovered it at the beginning of November, when the monthly statements are posted over to the UK. Three came all at once for August, September and October. October only went till the middle of the month, and when I looked closer it had a very strange thing: It said: 'Debit override'."

Mr Hare said the 'debit override' matched his account balance, which would normally be around $3,000-$4,000, but this time was only around $650 due to certain expenses requiring payment.

"We're about to send over more money for the beginning of the year, rang up RBC and couldn't get through to anybody," he added. "It was just ringing and ringing, or stopped at the answer machine. It was quite something. Nobody was being co-operative."

Mr Hare said that he quickly realised he was not the only RBC customer affected after he began investigating the situation. "It's quite wide. Several of my friends in Treasure Cay have been affected," he told Tribune Business.

"One chap went down to Marsh Harbour and tried to withdraw money and they said: 'No, you can't, the account's closed'. There was $15,000 in there. People in the US transferred $10,000, and they said: 'Sorry, the account's closed'. The people asked for their money to be transferred back, but it hasn't.

"This morning I've learnt from a group of condos that they have a collective bank account; a savings account used for maintenance, such as paying the gardener and pool cleaning. That account has been closed, and there was $20,000 in it," Mr Hare continued.

"Another friend of mine, who has a place in Lyford Cay and been there generations with quite large interests, their account was closed until they got a couple of New York lawyers and it was re-opened. I know people in Nassau have had the same thing happen to them. How many, I don't know. It's not just Abaco."

Mr Hare said he had sent RBC's Trinidad call centre a request to transfer the remaining balance in his account back to him two weeks ago, but no response had been received yet.

He added that while "we still love the Bahamas", the experience with RBC meant he had decided not to have a bank account in this nation any more.

"I'm making other arrangements," Mr Hare said. "I think people will want to deal with other things. People don't trust the banks down there. Certainly, from the point of view of being a financial services centre, which the Bahamas largely depends on, this could be very damaging indeed."

A Bahamas-based financial services provider, who handles the financial affairs of several expatriates impacted by the RBC account closures, warned that the situation would negatively impact perceptions of this nation at a time when it needs all the business it can get.

Speaking on condition of anonymity, they warned: "This will have an impact, I'm sure, because people will wonder whether they should still keep their second home here or go somewhere else more friendly.

"This is not the only place in the Caribbean where there's sun and sand. The problem is they can't even get to see the people to find out what's going on. You leave a message for anyone in the bank and they never call back, even head office.

"These people are going to tell everybody else where they come from about this, and it doesn't help. They help employ a lot of people, like maids and repairmen, on a trickle down basis."

DDK 6 years, 4 months ago

In this day of "digital" highly computerized banking, why does RBC simply not make its clients' funds available to them at another branch on the island of Abaco? This is really not good for The Bahamas. I would imagine a Post Office which is closed more than open does not help matters. It feels like we may be falling so far down the proverbial hole to the point of being unable to climb back up. For all the efforts of our current Government I sincerely hope it's not too little too late.............

jackbnimble 6 years, 4 months ago

RBC has been straight out trippin’ for months now and it’s gerting worse and worse. I wonder if they will ultimately pull out of the Bahamas all together. I take it before that happens though they will continue to rape their customers with high fees and bureaucratic procedures to keep their accounts open. You’d swear they are doing you a favor by letting you bank there.

Tell me, how is it that you have to pay a $5 monthly fee plus VAT to save with them? That’s $60 per annum plus VAT just to maintain a savings account people! And that’s just one stupid charge. They take your hard earned money, lend it to other customers at a high interest rate and then still turn around and charge you for making it available for them to use. That is utter nonsense! Anyone who continues to bank with RBC is just as foolish to let them get away with this.

I took pleasure in closing my account and cutting up my cards well over a year ago. I have no regrets and no issues with high fees where I’m banking now.

I urge Bahamians and foreigners alike to boycott this stupid bank. These weekly negative headlines are quite telling.

DonAnthony 6 years, 4 months ago

Which bank do you deal with now? I agree these fees are ridiculous and we should boycott.

OMG 6 years, 4 months ago

I personally know of a winter resident who has a home here who had his account closed-no notification , was received. Its a bloody disgrace. If you owed them they sure as hell would find your address/ Just think of the free money the bank is using whilst they deal with this. It seems there is a determined effort on the part of many including banks to destroy this country. Congratulations you are succeeding.

WTFBahamas 6 years, 4 months ago

This happened to me.

RBC played "we don't know what's going on" and "we are checking" for months. We tried to give them everything they asked for. This and that document.

Problem is no one is proactive or even reactive.

Then one day the account was "unavailable" and our funds were locked.

For almost 2 weeks we got no answer and no money. No details on how or when we would get it back.

Our external (international wire transfer in) BSD account was finally refunded to us in Bahamian cash which you can not deposit anywhere else in the world because Bahamian government regulations prohibit it.

This kind of cluster is a perfect example of why the Bahamian government regulations nor the businesses that have to abide by it, and are strapped by the low motivation mentality inhibit the growth that the new regime government so badly is desiring.

Should anyone care to actually make a difference and enact change, No one needs to hire a fancy consulting firm to tell them what's wrong and how to fix it. They just need to listen to those who love the Bahamas despite the major dysfunctions they are continually unable to overcome.

Socrates 6 years, 4 months ago

OECD and other 'big boys' are using the system, the one they created, to follow their people's money... apparently this global world is not global when it comes to money so they expect people to keep their money in their home country. its all utter BS about which nothing can be done... the losers are the little fries, like the Bahamas..

juju 6 years, 4 months ago

Commonwealth Bank threatened to close my account due to “inactivity”. Still WAITING to hear back from the Manager as to whether they will keep me as a customer.

RBC is truly the WORST. There is no such thing as customer service. Truly non existent at RBC or FINCO Bahamas.

juju 6 years, 4 months ago

How can RBC know it’s customer when they don’t answer their phones, and when you go to a Branch, wait in line for more than a lunch hour to process your compliance papers,it never gets done because “they are short handed”. I have been waiting since Oct 9 for paperwork to be processed! It is Dec 4th.

BaronInvest 6 years, 4 months ago

Wow, guess it is best to move your funds to an US bank while you still can.

banker 6 years, 4 months ago

This is a classical de-risking move to eliminate untoward clients that may have KYC/AML issues before you sell your book of business. This is what happened when BNP sold its book of business a few years ago in the Bahamas, but since most of the clients were offshore, there wasn't a squawk made.

TheMadHatter 6 years, 4 months ago

Oh those poor poor expat condo and home owners? They might sell out and go somewhere else that has sun sand and sea? Can they please hurry up and do so? Flights leave every day.

You mean they won't be here renting their places as hotel rooms to "friends who are staying with them"? You mean they won't be here hiring illegals at slave wages to do gardening and pool cleaning? You mean they won't have "friends" from abroad just happen to visit while they are re-shingling their roof and those "friends" just happen to lend a helping hand?

Certainly you can't mean the Bahamas has received this much good news this morning.

They say if something sounds too good to be true, it probably isn't. I predict more expat owners, more Haitian gardeners, more Costa Rican pool cleaners, and more Philipino live-in maids. But that's just me. What would i know about it?

OMG 6 years, 4 months ago

Madhatter , appropriately named for exaggerating the facts. On Eleuthera , winter residents contribute a huge amount to the economy, employing, gardeners, maids, builders, mechanics, plumbers and so on. If they left as you say then the economy would be worse than ever.I do agree that there need to be a tightening up of rental units/houses as this is not a level playing field when you compare the overheads and legal hoops a legit hotel has to abide by. Your paranoid xenophobia is just what we need to further isolate this country and if you get rid of all the leeching foreigners then who will employ all the labour and better still pay. A friend of mine in business prefers the foreigners because they pay.I guess you also object to the millions donated by foreigners and companies and the volunteer work done, but who am I to say ?

alleycat 6 years, 4 months ago

So jackbenimble, which bank did you move to, so the rest of us can follow??

And why is RBC claiming these clients don’t have “close economic ties like real estate or small business?” Don’t all second home owners have real estate, by definition? I have one neighbour whose account got closed twice, she has had real estate here for 40 years.

My account didn’t get closed yet, but I haven’t had a bank statement since April. When I asked they said they had gone paperless. So - I have to guess how much is in the account now?

This is ridiculous!

I suspect that if you sat and drank with me at one of my tea parties you would find we have much that we agree on.

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