By NEIL HARTNELL
Tribune Business Editor
Island Luck's principal yesterday said web shops were the "least likely" sector to pose money laundering risks, as he slammed claims its legalisation had endangered the wider financial services industry.
Sebas Bastian hit back at financial services executive, Paul Moss, arguing that his comments challenged the integrity of not just web shop operators but the sector's Gaming Board regulator.
Mr Moss had charged that the "overnight" legalisation of a previously illegal sector had created "a recipe for disaster" if global regulatory bodies, such as the Caribbean Financial Action Task Force (CFATF), were to scrutinise the situation.
But Mr Bastian, in a statement to Tribune Business, said the Government wanted to legalise, regulate and tax the web shop industry to address these very same concerns, ensuring the multi-million dollar sums it generated were brought into the formal economy.
He added that all licensed web shops applied strict Know Your Customer (KYC) and due diligence standards, given that they were being held to global best practices and closely supervised.
"The gaming industry operates under the tightest magnifying glass in this country," said Mr Bastian. "No industry undergoes greater scrutiny. We are regulated by, and visited by, the Gaming Board on a daily basis, just as the casinos at Atlantis and Baha Mar are.
"One of the most respected accounting firms in the region is the firm of record to review all of our transactions. We bank with a bank that is supervised by the Central Bank of the Bahamas, and is compliant with international risk compliance standards."
Responding to Mr Moss directly, the Island Luck chief added: "So, by saying that we in the gaming industry could bring down the financial services in the Bahamas, are you saying that you do not trust those who serve on the Gaming Board? Are you saying you don't trust the accountants or the bank or the Government?"
Mr Moss, president of Dominion Management Services, had argued that web shops were also operating as unlicensed banks and money transmission providers in Family Island communities where there is no commercial bank presence.
And he suggested that the way in which the sector was legalised had exposed "a glaring deficiency in our system" that could attract attention from international regulatory bodies.
Mr Bastian, though, countered that the web shop industry was the segment least likely to produce anti-money laundering/terrorism financing risks from a financial services perspective.
"There is absolutely no justification to tarnish respected professionals and institutions," he said. "Government wanted the industry regularised so that there would be security surrounding it, and we would be held to the standards that are acceptable in a world in which there is greater and greater concern with the source of funds.
""The reason reporting standards have gotten tighter is to guard against funds that could be linked to terrorist financing or other activities that could wreak havoc on a global scale. Our source of funds is so evident - a local population, with each and every person having to show proof of residence or citizenship. So, in fact, we are the least likely to be on a 'watch list' or raise concern from those whose prying eyes are trying to keep the world safe."
Dionisio D'Aguilar, the Cabinet minister responsible for gaming, recently acknowledged that numerous issues surrounding the web shop industry remained to be addressed, including the 10-year moratorium on new entrants, which he deemed anti-competitive; the proliferation of locations throughout the Bahamas; and implementation of its zoning regulations.
However, neither the current government, nor the Christie administration, ever appeared to address the fate of web shop operators' pre-legalisation profits, which were used to invest in legitimate sectors of the Bahamian economy, make mortgage loans and enter into a wide range of investment activities.
The web shop sector barely rated a mention in the Caribbean Financial Action Task Force's (CFATF) recent assessment of the Bahamas' anti-money laundering and counter terror financing regimes; possibly because the examiners were only looking at the period when it had just been legalised.
The industry's legalisation, as Mr Bastian explained, was driven in part because it represented a money laundering 'high risk' if it remained illegal, with millions of dollars being transacted outside the formal banking system and economy. Web shop operators are already generally recognised as having strict Know Your Customer (KYC) procedures in place.