By NEIL HARTNELL
Tribune Business Editor
The Minister of Tourism yesterday contradicted Sebas Bastian, Island Luck's principal, by suggesting the Bahamas' could again be 'blacklisted' through web shops acting as unregulated money transfer businesses.
Dionisio D'Aguilar, in an address to the House of Assembly, said it was "worrying" that web shops were filling the void created by commercial banks closing branches and withdrawing from more sparsely-populated Family Islands.
He added that, as a result, more Bahamians were increasingly using gaming houses as a means to conduct normal household and commercial transactions, and send and move money through the country - even though the sector was not licensed to provide money transmission services.
"The fact that clearing houses are closing branches throughout the archipelago, and leaving numerous islands without any banking facilities at all, [means] gaming houses are unintentionally - or intentionally - becoming the easiest and cheapest way to move cash throughout the islands," Mr D'Aguilar said.
"Mr Speaker, this is worrying because this type of unregulated cash movement without any Know Your Customer (KYC) regimes in place will surely, at some time, set off some alarm somewhere in the world in one of those organisations that can put us on some list, typically known as the 'blacklist', and injure our ability to conduct banking relationships."
The web shop industry would likely vehemently reject Mr D'Aguilar's assertion that it has no KYC regime in place, but the Minister's comments appear to contradict Mr Bastian's position that the sector is "the least likely" to be abused by money launderers or other financial criminals.
Mr Bastian, who responded to criticism by financial services executive, Paul Moss, in yesterday's Tribune Business, argued that the web shop sector "operates under the tightest magnifying glass in the country".
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."
Mr Moss, president of Dominion Management Services, had also argued that web shops were 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."
Mr D'Aguilar, meanwhile, said the Gaming Board will "consult" with the Central Bank to determine how to move forward and "ensure that the gaming houses do not negatively impact the stability of our financial sector".
The Central Bank earlier this year introduced the Payment Instruments (Oversight) Regulations 2017, which was designed as the supervisory framework for electronic payments solutions and providers.
Mr Bastian and Island Luck have previously expressed an interest in obtaining a license under this regime, but John Rolle, governor of the Central Bank, confirmed to Tribune Business earlier this week that no such licenses have yet been issued.
He added, though, that non-bank institutions already licensed by the Central Bank - the likes of money transmission providers and credit unions - had "expressed an interest in expanding their product lines" through such services.
Mr D'Aguilar, meanwhile, suggested none-too-subtly that the Government will seek to impose new or increased taxation on the web shops, describing their profits as "eye popping" for a "cash-strapped" government.
Gaming house operators are currently required to pay 11 per cent of their taxable revenue or 25 per cent of earnings before interest, taxes, depreciation and amortisation (EBITDA), depending on which one is greater.
The Minister also hit out at the 10-year moratorium barring new entrants to the web shop gaming industry, suggesting this had allowed existing operators to become "a cartel".
He added that the sector was also consolidating, with the larger web shops acquiring smaller players, as shown by the common ownership of some chains.
Mr D'Aguilar also called on the web shops to do more to combat gambling addiction.