The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Central Bank’s governor yesterday backed the Gaming Board’s findings that web shops pose no major money laundering threat to the domestic banking system and economy.

John Rolle, addressing an anti-financial crime seminar staged by the Central Bank and other financial services regulators, said: “On the gaming front, the Gaming Board has already published a paper which said that when it comes to gaming through web shops there is no indication of material money laundering activities.

“The Central Bank agrees with this assessment because it has been demonstrated that there is a very reliable system for monitoring the accounts that are maintained in the gaming houses. Casinos are the only material source of foreign currency inflows in the domestic banking sector. The Gaming Board also regulates casinos, and we understand that this is done to the same standards as in Las Vegas.”

The Gaming Board, in an assessment released in February 2019, said its one-month study had “debunked the myth” that web shops are vulnerable to financial crime and pose a significant risk to The Bahamas’ integrity.

Crystal Knowles, the gaming regulator’s chief counsel, said research showed that the average patron transaction of $60 - and account balance of just $5 - were “far too small” to suggest the sector was being exploited for illicit financial activities.

Writing in The Bahamas’ first-ever anti-money laundering and counter terror financing annual report, Ms Knowles argued that long-standing fears that the domestic gaming industry could be open to such abuses was “unfounded”.

The Central Bank on Monday pronounced that domestic banking presents a “low risk” for financial crime, with the main vulnerabilities stemming from three industries - gaming, real estate and money transmission.

The regulator, unveiling findings based on a study of 2018 deposit cash flows in the Bahamian commercial banking industry, said the real estate sector’s size - together with the cash-based nature of web shop gaming and money transmission services - made them the greatest domestic anti-money laundering/counter terror financing (AML/CFT) risks.

Web shop gaming and money transmission businesses were deemed more vulnerable than other industries in the 17 sectors analysed because cash-based transactions accounted for 93 percent and 73.8 percent of their total Bahamian dollar deposit flows respectively.

Of $187m in total customer deposits received by web shops in 2018, some $173m were in cash, while for money transmission businesses the total amount was $80m out of $108m. “The data suggests that cash-based money laundering risks are a more material exposure for gaming and money transmission activities,” the Central Bank added of its study’s results.

“In this area, however, the Gaming Board has recently published a study demonstrating that although the domestic gaming houses generate a great deal of cash, there is immaterial evidence of money laundering. It is also the case that the Central Bank requires the domestic bank (Bank of The Bahamas) providing deposit services to the gaming houses to conduct special testing of this risk. There is no current evidence that retail gambling in the gaming house sector is a material money laundering risk.”

Mr Rolle said yesterday: “The bottom line is that with limited exceptions, there is no evidence that any element of the domestic banking industry or that industry’s clients is facing material money laundering or facilitating material money laundering.

“In 2018, Bahamian domestic banks accepted about $52bn in deposited funds from commercial customers. The three Canadian banking groups account for 90 percent of deposits placed in commercial deposit accounts.”