Money Transfer Business Faces Regulatory 'Review'


Tribune Business Editor


THE Deputy Prime Minister yesterday said he has requested a regulatory "review" of the money transfer industry to ensure there are no loopholes that can be exploited by financial criminals.

K P Turnquest, describing the sector as "the next big thing", told Tribune Business that the Government wanted "to get a handle" on a sector where operators and locations are multiplying rapidly following Western Union's return to the market.

Acknowledging that digital banking was "the wave of the future", and that money transmission providers can help fill the void created by commercial bank exits from the Family Islands, Mr Turnquest said this had to be balanced with ensuring the necessary anti-money laundering and terror financing controls were in place.

Disclosing that concerns had been expressed over the business's rapid growth and accompanying regulatory regime, Mr Turnquest said: "I've asked for a review of that whole situation just to see how it happened.

"There have been several complaints with respect to the handling and the whole transfer business; how it works." The Deputy Prime Minister declined to go into detail over the concerns and "complaints" received by the Government, other than to reaffirm: "There are some issues we are looking at."

His comments came as Tribune Business sources suggested there was increasing industry disquiet over how the Jamaican conglomerate, GraceKennedy, had obtained a licence to operate in the Bahamas as a Western Union agent.

Several contacts, speaking on condition of anonymity, questioned how GraceKennedy had been able to enter a market that was supposedly reserved for Bahamian-owned businesses only.

Tribune Business could find nothing in the National Investment Policy stipulating that the money transfer business is exclusively reserved for local ownership. And, since it is 'Policy', this is liable to be waived by the government of the day in certain circumstances.

This, it is understood, is what happened with GraceKennedy's permission to operate in the Bahamas. Tribune Business was told that approval was granted in May 2016 by the former Christie administration following heavy lobbying from the former Jamaican prime minister, P J Patterson, on GraceKennedy's behalf.

Mr Patterson was thought to be close to former prime minister, Perry Christie, and several members of his Cabinet, and made numerous trips to the Bahamas under the former administration while representing companies such as Digicel.

Mr Turnquest yesterday said he understood that GraceKennedy's permit was obtained under the former administration, and while possessing no direct knowledge had "heard" of the former Jamaican prime minister's involvement.He added that he made inquiries of persons in the money transfer business after Tribune Business revealed GraceKennedy's coming, and was told that the Jamaican conglomerate's coming had "kind of blindsided" the sector.

GraceKennedy's arrival through its first location at Bahamian company, Tripoint Communications, appears to have sparked an expansion drive among rival Western Union agents that is reminiscent of the post-recession web shop explosion.

The other two Western Union agents, especially Barry Malcolm's Sun Cash, as well as Money Maxx, have embarked on a rapid location roll-out in what many observers believe is a strategy designed to keep out/restrict GraceKennedy's ability to do likewise. Tribune Business found this out when, while visiting its local plumbing store last week, the shop assistant spent more time promoting its new in-store Western Union outlet.

And there are other potential entrants seeking to enter an increasingly crowded space which, apart from the three Western Union agents, also includes the likes of Omni Financial Group and Cash n' Go.

Tribune Business's attention was drawn to the website and Facebook page of a company called JVR Xchange, which bills itself as a soon-to-launch money transfer and bill payment service that will have locations in all 13 of Super Value's food stores plus "three flagship stores" in New Providence. The launch date is February 2018, and coverage is also promised in the Family Islands.

It is this rapid, ever-growing proliferation of money transfer businesses and locations that has likely attracted the Government's attention. Harvey Morris, chief executive of Omni, one of the more established providers, told Tribune Business last week that the "rapid oversaturation" of the market could provide cover for increased criminal activity.

Confirming that the Government will be working with the Central Bank, Mr Turnquest said: "We've had several requests to facilitate this money transfer system throughout the Bahamas.

"We're looking at the business from a regulatory perspective. We want to make sure the system is secure and all the regulatory provisions are in place - all the Know Your Customer (KYC) provisions are in place - to protect the financial system."

The Deputy Prime Minister added of the money transfer business: "It's becoming the next big thing, and so we have to get a handle on it to protect the financial services system and don't allow abuses through lack of oversight."

He conceded that this had to be balanced with permitting the private sector to thrive, and said: "These are entrepreneurs trying to fill a need, a void that exists as a result of these [bank] closures and we have to be sensitive to the fact these communities need some kind of financial services.

"Digital banking is the wave of the future, but we have to make sure the proper controls are in place."

Mr Morris and members of Omni's management team had suggested that fraudsters and other financial wrongdoers could exploit the lack of connectivity between different providers to 'bounce' from one money transmission business to another.

They expressed concern that this could enable a money launderer, for example, to conceal their activities by conducting small transfers with multiple transfer outlets - a process that is known as 'layering'.

Omni's executive team said the entire money transfer industry needed to work together and "play close attention" to such problems, expressing fears that they could result in the Bahamas being 'blacklisted' yet again if unchecked.


TheMadHatter 2 years, 5 months ago

So, i suppose, having heard of how the Bahamas continues to bend over and pick up the soap with regard to the Haitian take-over, the Jamaicans have decided to join the party.

Who can blame them?

Free land, free clinics, free NIB deduction, free schools, All Aboard!!!


ohdrap4 2 years, 5 months ago

they have a 2-4 year window to operate for free and gratis.

they already announced the credit bureau will take that long to be implemented.



Chucky 2 years, 5 months ago

"Anti money laundering and terror financing controls in place".

This is how it starts, under the guise of "good sounding regulation" the existing money criminals have the government protect their market.

As if a Bahamian sending 50 bucks has anything to do with terror financing.

Wanna learn bout terror financing, as the US government how it's done, they do the lions share of it.

All this is, well it's rules to protect the big boy's market.


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