The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

Improvements to the Bahamas’ anti-money laundering framework and electronic payment solutions will help this nation combat the threat posed by correspondent banking ‘de-risking’, the Central Bank’s governor believes.

John Rolle told Tribune Business: “There is a lot of work going on in that area. The general work that we are doing in the Bahamas is around the anti-money laundering framework, which is sort of coalescing around the national risk assessment strategy report that has been drafted.

“What that report helps with is identifying areas where the regulators and the law enforcement agencies see a scope for improvement in their operations and activities”

Mr Rolle added: “There is likely to be work in the areas that help in terms of elevating the positives in our framework and, to the extent that you can continue to work on those, it will help in terms of the jurisdiction’s profile and how the financial institutions benefit in terms of their correspondent banking relationships. The anti-money laundering framework is one of the areas where work is happening.”

Bahamian financial institutions are being subjected to “heightened due diligence” by their US and other correspondent counterparts. Correspondent banks are those that allow Bahamian financial institutions to provide services in their home countries, using their physical and electronic banking infrastructure. They give Bahamian banks, and their clients, access to the international capital markets and financial system, enabling transactions to clear and be settled on a timely basis, and foreign currency deposits to be taken.

The Central Bank, in its second survey on the effects of correspondent bank ‘de-risking’ on the Bahamian financial services industry, found that 14 of the 54 respondents (some 26 per cent) had lost at least one correspondent banking relationship within the past three years.

Meanwhile, Mr Rolle told Tribune Business that more focus will be placed on increasing the use of electronic payment solutions in the Bahamas, as cash has always been flagged as ‘higher risk’ for money laundering and other criminal activities.

“The other area where we are starting to feel a bit more upbeat is the general framework to provide more electronic payment solutions to the population, because that means less use of cash, and cash is always flagged as higher risk for money laundering and criminal activities,” he explained.

“The extent that you can get any business or establishment to be less concentrated on cash in their operations, that helps them in their relationship with the banks, and it also helps in terms of how the country is able to manage its overall risk exposure to criminal activities involving cash.”

Mr Rolle continued: “For us that is going to translate into a very focused education and awareness campaign around people understanding what are the sort of safety precautions and safeguards they should have in place when dealing in the electronic space, and also getting people to understand the risks involved with personal reliance on cash in many settings.

“We have to do a lot to increase and maintain confidence and comfort in people using electronic solutions. There is going to be a lot of public outreach around that area.”