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Web Shops: No 'Red Flag' With Us

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

WEB shops yesterday slammed claims they are open to financial abuse and responsible for the Bahamas' recent 'blacklisting', saying: "No one can point to any red flags."

Gershan Major, the Bahamas Gaming Operators Association's (BGOA) chief executive, told Tribune Business it was "virtually impossible" to suggest the sector represented a money laundering/terror financing risk given the strict regulatory and operating standards it is subjected to.

The Association, which represents the Bahamas' licensed domestic gaming operators, yesterday said it was becoming "increasingly concerned" about claims it was responsible for the European Union's (EU) March 9 decision to brand this nation 'non-cooperative' in the fight against tax avoidance.

Mr Major emphasised that the rationale for this 'blacklisting', which is based on 'economic substance' and 'ring fencing', was effectively a different world from that inhabited by a domestic gaming industry which creates no tax-related concerns for the EU's 28 member states.

And he also reiterated the sector's compliance with strict regulatory conditions in response to a recent US State Department report, which identified "gaming" as a popular money laundering mechanism in the Bahamas.

The annual US International Narcotics Control Strategy Report (INCSR) did not distinguish between whether it was referring to casino or web shop-based gaming, or both, thus allowing a negative perception to hang over both sectors even though no specific evidence was produced to back up the allegations.

"We are very concerned given that a lot of the comments and overtures are not based on fact at all," Mr Major told Tribune Business.

"If one was to take their time and recognise the tremendous amount of oversight by the Gaming Board, and what the industry is complying with, they would realise it would be virtually impossible to have such concerns regarding anti-money laundering and terrorism financing issues."

Praising the Gaming Board for "doing a fantastic job", Mr Major said the regulator had access to web shop servers; is able to carry out daily monitoring of gaming activities through its inspectors' presence at the industry's locations; and received regular Suspicious Transactions Reports (STRs) from operators.

"The level of oversight by regulators is quite significant, and the level of compliance and standards adhered to by operators is significantly high," the Association's chief executive reiterated.

"I think the actual business and industry itself has been operating in accordance with its required regulations since it was regularised in 2014. The Association recognises that approved operators, and I emphasise the word 'approved', are doing their part to ensure they operate in a world-class manner, complying with audit and regulatory requirements.

"We have had no issues, nothing has been raised, and there are no red flags anyone can point to with regard to the industry operating in accordance with its regulatory requirements. Absolutely none."

The Association and its members are thus pushing back hard against those seeking to blame the industry for the Bahamas' recent regulatory woes, with Mr Major questioning why so few were failing to check the facts before speaking out.

Still, the US State Department's INCSR report described the web shop sector as "flourishing", and called on the Bahamas to enforce the "full implementation of appropriate safeguards" on the gaming industry.

"Money is laundered through the purchase of property, businesses created for money laundering purposes, and gaming," the report said. "The Bahamas has three large casinos, including the Caribbean's largest casino (the $3.5 billion Chinese Export-Import Bank-funded Baha Mar mega resort) which partially opened in April 2017. Gaming operations based on US lottery results, locally known as 'web shops', flourish."

No evidence was supplied to support the US government's assertion about the gaming industry's abuse by money launderers, and the report acknowledged the strict regulatory requirements imposed on both hotel casinos and web shops to counter such crimes.

"Casinos and web shops are licensed by the Gaming Board, and are required to maintain strict internal controls and accounting, comply with AML/CFT (anti-money laundering/counter terror financing) requirements, and submit STRs (suspicious transactions reports)," the US government report said.

"Geo-fencing protections built into gaming software ensure online gaming activities are inaccessible outside the country. The Gaming Board vets all online gaming platforms (software) and retains the ability to log into the programs remotely to observe operations in real time."

Dionisio D'Aguilar, the Cabinet minister responsible for gaming, generated significant controversy and web shop 'push back' last year when he suggested the industry was vulnerable to money laundering, and could damage the Bahamas' reputation, by allowing its accounts to be used for money transfer purposes.

He argued that the industry was not verifying the source of customers' funds, but the web shops hit back by arguing they had implemented stricter anti-money laundering (AML) regulations and standards than 'mainstream' financial services providers. Island Luck, recognised as the market leader, moved to close down accounts not being used for gaming purposes.

Mr Major, meanwhile, said he had "no idea" why some observers were blaming the web shop industry for the Bahamas' EU 'blacklisting' when there was not even the remotest link between the two.

He added that all Government ministers addressing the issue had confirmed it related to tax matters, especially the issue of 'economic substance' and physical presence, and the Bahamas' failure to satisfactorily address the EU's concerns in a manner the latter deemed satisfactory.

Comments

DDK 11 months, 3 weeks ago

The only reason I can come up with that Government prefers web shops to a national lottery, other than graft, is that it is easier for it to collect tax than to administrate a national lottery. Never mind the damage to our people, our reputation and our economy. While one must wonder whether we could actually administrate a national lottery without the funds disappearing, giving it a go would still be preferable to this drain on our economy and would eliminate much of the gambling addiction that has taken hold. IF we could get the judicial system in order it would deter mismanagement as well as the web bosses maintain control over their lucrative slimy business.

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bogart 11 months, 3 weeks ago

The former loans officer knows fully well that even the multi billion dollar commercial clearing banks cannot fully say they are not victims of money laundering etc activities as recent cases ie the COB employee, the BPL employee? and others involving a number of banks have revealed. However these banks continue to refine their proceduures to prevent this.

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sheeprunner12 11 months, 3 weeks ago

Is this Gershon Major of the Numbers Mafia any relative to Paul Major in JunkanooCarnival or Dwight Major the drug dealer?? ........... These Majors really produce major problems for this country.

Is there any coincidence that since 2013, the clearing banks have begun to downsize, consolidate and withdraw from our Bahamian communities??????

And who is policing the webshops accounts??????? ...... PW&C or EY?????? ...... I think not!!!!!!!

Can $30 million in annual webshop taxes and $7 million in annual "social contributions" justify the damage that these Numbers Mafia bosses have done to thousands of Bahamian homes and our national reputation??????? ............ Webshops are NOT worth the social dysfunction.

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bogart 11 months, 3 weeks ago

A fundamental existance of the Commonwealth of the Bahamas is the secret vote of the people to democratically choose and the people voted no to web shop gambling. In a small closed shop economy the govt,.... however small a nunber of decision makers ....chose to go against the majority of Christian voters. This in essence places the nation no less different now than many previous latin nations who are governed by a handfull of decision making wealthy land or business owning famillies who control the economy., ownership of businesses..,rental office space to govt, apartments, landholdings... Given the trajectory the gaming families could and will of course choose to support those who support their interest in furthering the best investments for their immense cash generating 400 some web shop income generating closed business. Who would not do the same???

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ThisIsOurs 11 months, 3 weeks ago

"We have had no issues, nothing has been raised, and there are no red flags anyone can point to with regard to the industry operating in accordance with its regulatory requirements. Absolutely none.""

Pointing ->"Money is laundered through the purchase of property"

Classic case

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John 11 months, 3 weeks ago

This was an infamous strategy of the white boys over the decades. Whenever anything is successful and they are not involved or not benefiting from it they will seek to destroy it, to tear it down. Just check the history. And the war on drugs is more or less a fight to protect the Alcohol and tobacco industries that have been on a decline for the past decades for at least a decde. Be careful they don't try to declare The Bahamas a failed state and try to take over its government. remember the country has oil, salt, aragonite and a lucrative air space among other things. That's how serious this is. and don't forget what they attempted to do to bBahamians when Bill clinton was president. We forget, they never forget.

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Well_mudda_take_sic 11 months, 3 weeks ago

There you go again John, playing that old lame race card in an effort to support the thugs you are always singing to for your supper. The scumbag likes of Sebas Bastian and Craig Flowers are a deadly cancer eating away at our society with enormous damage to our country's reputation. These thugs will soon destroy all of us if they are not put out of business. Minnis and the FNM must stop taking the money, perks and favours that these low-life criminals continue to throw their way to buy influence with local regulators in the conduct of their money laundering and other racketeering activities.

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Aegeaon 11 months, 3 weeks ago

Load of garbage and criminality. The number boys before 2013 were running an illegal gambling venture outside of an established and controlled area from Atlantis. The rumors of segregated gambling is a lie, just so we can be lazy. (Black) Bahamians would had owned a gambling venture, but in a controlled and responsible manner like Atlantis. We voted NO, yet they managed to win.

Those shops were unregulated, money laundering sites for Sebas and Craig to feed the gangs more funds for the street wars. Yet that's positive? No.. We could have benefited from gambling, but as open and transparent to the law enforcement so we can understand where the money is going.

The Bahamas has been a narco-state and paradise for criminals and terrorists too long, and this success has cursed Bahamians to do the same thing, sell drugs, rape, launder money and kill and you will have fame and glory, and when America tries to help, they're wrong. Horrid, atrocious and terrible behaviors that we've allowed too long. We need to benefit from legit and fair activities, not terrorist or criminal level ventures.

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pablojay 11 months, 3 weeks ago

The" red flags" fly atop thousands of Bahamian homes who are mercilessly ripped off daily by "spinning", by our newly minted multi-millionaires, who can only see green. The strange thing about this is that if the webshops were owned by white Bahamians, our reverend gentlemen and ladies would be screaming from the hilltops .

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John 11 months, 3 weeks ago

"

"Each year, the government estimates, over 300 tons of cocaine are smuggled into the country. Even more disturbing is that in each year since 1991, cocaine and crack use has risen." 300 metric tons/year. What America's Users Spend on Illegal Drugs 1988-1998. Report from the ONDCP. December 2000. "According to the ..". and . "Researchers have been scouring rivers in Europe and the US for traces of cocaine consumption. The result: Cocaine use is probably much greater than previously assumed -- and New Yorkers are the biggest coke-heads of all."

furthermore

"

90 percent of cocaine coming to the U.S. during the first half of 2015 made its way through the Mexico and Central America corridor. That number is up from 86 percent in 2014 and 80 percent in 2010.2 Today, groups in Colombia produce 70 to 80 percent of the world’s cocaine, which is made from locally grown coca plants and from cocaine base imported from Peru and Bolivia. Cocaine is listed as a Schedule II controlled substance because it has medical use, but also has a high potential for abuse.3 The U.S. government agencies primarily responsible for apprehending cocaine traffickers are the U.S. Drug Enforcement Agency (DEA), Federal Bureau of Investigation, U.S. Customs Service, U.S. Border Patrol, and the U.S. Coast Guard. The price of powder cocaine in the United States varies greatly by location, and is less expensive in those areas closest to the hubs of drug smuggling and criminal activity. The United States has spent approximately $100 billion annually over the past decade on illicit drugs.4" and .

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John 11 months, 3 weeks ago

Since 2007, cocaine seizures at

California POEs have equaled or exceeded seizure totals at South Texas POEs; nonetheless, overall seizure totals remain lower than t Sinhe seizure totals recorded before the significant decline was noted. Although no single cause for the decline in overall seizures can be identified, multiple factors--including a sharp decline in cocaine production in 2008 (see Figure 7 in Cocaine section) and enhanced GOM counterdrug efforts--likely contributed to the decrease in amounts being transported from South America to Mexico and ultimately to the Southwest Border. Moreover, several exceptionally large seizures of cocaine destined for Mexico from South America in 2007 may have initiated the trend. These seizures coincide with the decline in seizures along the Southwest Border and were followed by an unprecedented decline in cocaine availability in many markets in the United States.

The easily verifiable facts do not bear out what you are trying to imply. The US is the major user of COCAINE in the world. The DEA has COCAINE listed as a less dangerous drug than MARIJUANA. Less than 2 percent of drugs currently transited to the unites states pass through the Bahamas. And Bahamians are even involved to a lesser extent even drug trafficking even in the amount of drugs that are being trafficked through the Bahamas. This country is just a soft target. And DEA agents come here pretending to work while on extended vacations. Living on taxpayers money. NEW YORKER'S ARE THE BIGGEST COKE HEADS OF ALL. So how does cocaine get all the way to New York.. Blaming Bahamians again? amen. And the majority of COCAINE is currently being smuggled thru CALIFORNIA..not the BAHAMAS..go learn it. Marijuana is grown, processed and sold LEGALLY in at least thirty states in the US. The war on drugs is actually a battle to save Tobacco and Alcohol companies as their products are on a serious decline, especially amongst the young generation. Generation Z.

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John 11 months, 3 weeks ago

And we must blame our uninformed law enforcement officers who swallow everything they are fed,hook, line and sinker rather than researching the facts for themselves. Joint efforts are suppose to beneficial to all parties and not just one force being hoodwinked and bamboozled by the other, with fake information.

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John 11 months, 3 weeks ago

Fifty persons arrested in a police operation in Grand Bahama and only three brought before the courts. not unlike Nassau a few weeks prior.

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realitycheck242 11 months, 3 weeks ago

I think John is one of them WEB Shop owners who living big time...he always defending them.........if not an owner....he surly on their payroll.....hahaha

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sheeprunner12 11 months, 3 weeks ago

John ........ do you have a day job??????? ....... I hope you are not a civil servant!!!!!!!!

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bogart 11 months, 3 weeks ago

.......worried he might be the one responsible for removing the barge from Long Island huh???

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sheeprunner12 11 months, 3 weeks ago

BOL ....... the waves have already taken care of that ...... Creole Frankie and Rummy say that it posed NO problem to our island ........ smt

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