The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian commercial banks will soon be subjected to a “scorecard” that rates how well they perform in facilitating the ease of doing business and financial inclusion, a top regulator revealed yesterday.

Karen Rolle, the Central Bank’s newly-appointed inspector of banks and trust companies, said the regulator has partnered with the Bahamas Chamber of Commerce and Employers Confederation (BCCEC) to address the complaints voiced by companies over the difficulties encountered in opening “operating deposit accounts”.

The findings, she added, will be used to create a less bureaucratic but risk-based approach to Know Your Customer (KYC) due diligence that banks will conduct when on-boarding new corporate clients and setting up bank accounts for them.

Ms Rolle, in her first quarterly letter to all Central Bank licensees, said: “The Central Bank is currently engaging with the business community through the Bahamas Chamber of Commerce and Employers Confederation to quantify and address concerns around challenges faced by businesses in opening operating deposit accounts with commercial banks.

“The Central Bank will use this input to develop a framework to provide a more streamlined, but still risk-based, approach to customer due diligence for businesses. As a part of our anti-money laundering examination process we will also be introducing a segment that assesses and rates operating practices within each commercial bank that impact the ease of doing business and financial inclusion. It is expected that the scorecard produced for each institution would be published.”

Commercial bank consumers, both retail and commercial, will likely welcome such an exercise given that many have complained for years that the industry gives less than stellar service through automated teller machines (ATMs) not working or long in-branch queues resulting from there being too few tellers. 

The drive to push Bahamians to online and digital banking has caused further friction with some customer segments, while the bureaucracy and red tape associated with opening a bank account - a process that takes far longer than in Canada or the US - has been a sore point ever since the financial services regime was overhauled in 2020 due to the Financial Action Task Force (FATF) blacklisting.

Ms Rolle, meanwhile, pledged to work with the Bahamas Association of Compliance Officers (BACO) to develop “an approval regime for compliance officers. Draft guidelines around this framework will be issued for industry consultation”.

Elsewhere, “operational enhancements to the Deposit Insurance Corporation and legislative amendments to the Bahamas Cooperative Credit Union Act” are also in the pipeline. And all existing Central Bank guidelines and guidance notes will be reviewed to ensure they align with Bahamian law and international best practice.

“By the end of the fourth quarter 2022, we expect to introduce an online portal to receive and process the suite of applications for regulatory approvals. This project is now in the pilot testing stage. Once implemented, the portal will streamline the process of interacting with the Central Bank for approvals and provide added transparency around the documentary requirements for regulatory approvals,” Ms Rolle said.

“In our risk-based approach, the intensity of our supervision is tailored to the assessment of the risk that each supervised financial institution poses to the financial sector and the jurisdiction. The Central Bank will therefore continue to assess whether our practices are truly aligned with a risk-based methodology and not conveying a ‘one size fits all approach’.

“This does not diminish the fact that all supervised financial institutions are held to the same regulatory standards as appropriate. On balance, a ‘fit for purpose’ approach will enable us to take an introspective assessment of our practices and make the necessary adjustments to ensure that The Bahamas maintains a transparent and defensible framework that meets the test of effectiveness against international standards.”