The Tribune

• ‘Small, black island state’ at double standard mercy

• But US gets away with ‘blatant’ money laundering

• As Bahamians ‘treated like criminals’ by the banks

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ bank account-opening woes are the product of “a bad faith system” that it “can do nothing about”, a top Central Bank regulator admitted yesterday.

Charles Littrell, the Central Bank’s inspector of banks and trust companies, bluntly told Bahamas Institute of Chartered Accountants (BICA) members that this nation was the victim of global double standards imposed upon it by the major industrialised countries when it came to Know Your Customer (KYC) “overkill” and associated scrutiny.

In a frank, candid address during the Accountants Week seminar series, he asserted that the US “gets away with blatant money laundering” and “crappy banking because it is the US”, while Canada does likewise because it is the US’ northern neighbour and “a white nation”. The Bahamas, as a “small, black island state”, enjoys none of these protections.

Conceding that the situation was “irritating, infuriating and unfair”, the Central Bank inspection chief nevertheless conceded that some Bahamian financial institutions have “not covered themselves in glory” either when it comes to financial crime and suspect transactions had been detected “much more often than we’d like”.

Mr Littrell spoke out after Philip Galanis, the HLB Galanis & Company managing partner, blasted the commercial banking industry for “treating Bahamians like criminals” when it comes to opening account facilities. He argued that many felt they were treated as guilty until proven innocent, with protracted KYC scrutiny and associated delays undermining the ease of doing business.

“I can walk into any bank in the US and Canada and come out 15 minutes later with a bank card having opened an account,” the former PLP MP and Senator said. “Bahamians are treated like criminals at the bank.

“I think it’s wrong, it’s unconscionable and certainly doesn’t help businesses incorporate and assist in opening bank accounts for our clients. There must be something we can do to remedy the situation.”

Mr Littrell, in response, said the Central Bank had been “signalling to the banks” over the past three years via the reformed Financial Transactions Reporting Act and accompanying regulations that “they do not need to overkill in this space”.

He added that Bahamian commercial banks are being encouraged to move away from relying on utility bills as proof of someone’s address, and instead use phone and e-mail contacts. Members of the Jamaican and Haitian communities should be able to open accounts with a passport and one form of Bahamian identification, while account balances under $50,000 should be treated as “low risk”.

The Central Bank inspection chief said a further complication arises from the fact that the Canadian-owned banks, which account for 75 percent of commercial banking business in The Bahamas, were subject to KYC compliance directives and rules issued by their global head offices.

However, he quickly conceded that the US is “not held to the same international standards” as The Bahamas and that “they get away with blatant money laundering”. From The Bahamas’ perspective, Mr Littrell said: “It’s irritating, it’s infuriating and it’s unfair, but there is nothing we can do about that. We’re not going to go down that track.”

Responding to his suggestion that Bahamian commercial banks were now “better” at easing KYC bureaucracy and red tape, Mr Galanis said: “With all due respect, I think the banks are not paying attention to the Central Bank’s recommendations and directives because they have not relaxed their account opening requirements.

“Canadians in Canada do not have to face the scrutiny we face here in The Bahamas. Canadians do not have to face the difficulties we do. It makes it very difficult to do business in The Bahamas, and leaves a bad taste in our mouths that we’re almost criminals until proven otherwise.”

Mr Littrell, while disclosing that the Central Bank plans to be “assertive with guidance it will issue shortly”, said: “The objective facts are that i is easier to open a bank account now than it was in 2017.”

However, he agreed that it was much easier to do so in the US and Canada, and added: “The Bahamas is held to a higher standard and that’s just the way it is. America gets away with crappy banking because it is America. We can’t afford to do that.

“Canada gets away with crappy banking because it is right next to America and is a white nation. We are a small, black, island state...... We’re not playing in a good faith system.”

Mr Littrell said The Bahamas was already “starting out from behind the 8-ball” when it came to balancing the fight against KY “overkill” and protecting the country from outside attack. He added that this nation would be targeted if it allowed its citizens “to do things that Americans and Canadians routinely do now”.

However, the Central Bank chief inspector said concerns over double standards should not obscure the “room for improvement” in The Bahamas when it came to applying the country’s anti-money laundering and counter-terror financing regime.

“The Bahamas is not perfect,” Mr Littrell said. “Much more often than we’d like we’ve seen institutions engaging with suspect foreigners, inept practices and not covering themselves in glory in the anti-money laundering space. We’re got room to improve, but we’re not in a good faith environment.”