The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamian money transfer market "risks rapid oversaturation", with one provider yesterday warning that this could provide cover for increased criminal activity.

Harvey Morris, Omni Financial Group's chief executive, and members of his management team said 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 told Tribune Business that 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.

Mr Morris, meanwhile, said the sector's already-thin transaction margins were likely to come under sustained pressure from Western Union's move to rapidly re-establish a Bahamas-wide presence using multiple local agents. "It's going to be interesting to see what happens," he told this newspaper, "because Western Union, it's not one agent coming to the Bahamas; it's three agents competing to establish a footprint at the same time.

"We are currently at the risk of going to oversaturation very quickly with very thin margins. It's a competitive business, but we have to wait to see what happens. Omni intends to defend its position and do what we can to retain our current market share."

Western Union has partnered with both local and foreign agents in its return to the Bahamas. Its local agents are MoneyMaxx and Sun Island Transfers, the latter of which is headed by former Omni executive, Barry Malcolm, while Jamaican conglomerate Grace Kennedy has brought its existing Caribbean-wide tie-up with Western Union to the Bahamas with a first location at Tripoint Communications.

Western Union's website currently shows 16 locations in New Providence and three in Freeport, with the global money services provider returning to the Bahamas' major population centres in a big way since Fidelity Bank (Bahamas) severed their relationship several years ago.

A key factor in that break-up is the 'high volume, low margin' nature of the money transfer services business. Industry players are frequently dealing with small sums of money per transaction and, with ever-increasing compliance and customer due diligence costs, Fidelity decided to exit what it viewed as a 'high risk' business that does not generate matching returns.

Mr Morris told Tribune Business: "There is a significant amount of risk involved in the business because it's a cash business, and with risk comes cost. That is one of my concerns with so many players coming back to the market at one time.

"There may be a proliferation of structuring, where people do multiple small transactions to stay under the radar. And there is no connection between the different carriers. That is a serious concern."

The Omni chief executive added that international agencies focused on combating money laundering, such as the Financial Action Task Force (FATF), tended to focus on cash-based transactions and businesses as posing a high risk of being exploited by criminals and terror financiers.

He described fraud, in particular, as a "huge" risk for Bahamas-based money transfer providers, adding that it was the type of crime "we see most".

Christina Sands, Omni's general operations manager, told Tribune Business that many customers were sending funds to "high risk jurisdictions" known for the presence of fraudsters and scammers.

She added that low-level frauds, where Bahamians are scammed and duped out of their money by persons they have met on social media, lottery scammers and other financial criminals, were something Omni paid special attention to.

"We try to deter people from being scammed out of their money," Ms Sands said. "People have a tendency to send money to high risk jurisdictions. They meet these people online, communicate through Facebook and What's App. The Nigerian ones are unbelievable."

Christof Fox, Omni Money Transfers' general manager, said the entire money transfer industry had a duty to protect the Bahamas' reputation and integrity, especially since information sharing between providers was still in its infancy.

Emphasising that no provider was being accused of complicity or wrongdoing, Mr Fox said of the trends witnessed by Omni: "It's evolving into something.

"Persons are contacted via social media, they are promised things such as money and marriage, and they get people to send money to them, such as buying a ticket to come to the Bahamas.

"We've had to develop compliance rules, systems, processes that try as best as possible to deal with these transactions."

Calling on all money transfer providers to follow Omni's lead "to protect the market and industry", Mr Fox added: "It doesn't help the Bahamas if Omni stops the transaction, and they walk into another company and are able to send.

"It's important as a group and industry that we really pay close attention to that, and all do the same thing. Everyone has to do their part to protect the industry.

"What we don't want is a blacklisting where someone says there is a high incidence of fraudulent transactions originating in the Bahamas because licensees are not doing what they should be doing, and regulators are not paying attention to it. We have to be careful there."

Mr Morris acknowledged that balancing compliance and associated costs with "excellent customer service" and value for money was an ongoing challenge for the sector.