By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

WEB shops have filled the money transfer void because commercial banks “fell down big time”, a Chamber of Commerce director is arguing.

Roderick Simms, chair of the Chamber’s Family Island division, told Tribune Business that the banks failed to provide the necessary e-banking platform and consumer education as they retreated physical locations in Family Islands, allowing the numbers houses to fill the gap.

He argued that both elements were important to transform what remains a largely cash-based Bahamian society, and especially questioned why the Canadian-owned banks had not implemented the common platform used in their home country.

“What has not happened in this country is that the traditional banks have not created an online platform that can transfer money to any account,” Mr Simms blasted.

“In the US and Canada, you can transfer money to anyone regardless of what bank they bank at, but we have not done that.

“They [the web shops] don’t fill a vacuum. In my opinion, they filled an intentional vacuum that the retail banks left because e-banking, e-commerce did not evolve.”

Mr Simms continued: “The web shops came in, had a service and the islands took advantage of that service. In my opinion, the clearing banks have not evolved, and they cannot use the web shops as an excuse. They argue that the web shops encroached on their business, but no, you fell down.

“If the clearing banks had developed this platform, the web shops may not have entered into it. The retail banks fell down. They did not evolve, and are pulling out of the Family Islands and not putting this platform in place where someone in Inagua can purchase from Freeport by transferring the money from Scotiabank to Royal Bank of Canada.

“The commercial banks are to blame for what we have today. They are not without fault in this situation. The clearing banks fell down big time. They can’t blame the web shops for filling the void.”

Mr Simms was speaking after Dionisio D’Aguilar, the minister responsible for gaming, warned that web shops’ unlicensed and unregulated money transfer activities threatened to undermine the wider financial services industry by attracting the attention of ‘blacklist’ happy international regulators.

He added that he would be working with the Central Bank to address the issue, with the latter having previously looked to license electronic payments solutions providers as means to ensure remote Family Island communities still had access to financial services.

No such licenses have been issued, despite regulations having been passed, and Mr D’Aguilar challenged the web shops’ assertion that they adhere to the highest Know Your Customer (KYC) standards by arguing that they did not verify sources of customers’ income.

The web shops have argued that they only deal with relatively small amounts, less than $300 per customer per day, and that this - together with the Bahamian-dollar denomination of most currency, means they present a ‘low risk’ of money laundering abuse.

Mr Simms, though, said Family Island residents and businesses were being left with little choice but to turn to the web shops due to the speed of commercial bank withdrawals and the absence of alternative, electronic banking channels.

He added that education was especially important in a cash-based society, but little was being done to transition Bahamians to e-banking and e-commerce.

“You’re dealing with a cash society that has always been so, yet the banks are pulling out in 60 to 90 days,” Mr Simms told Tribune Business. “How does that work?

“If I’ve been cash all my existence, how does that work? You have a society with a lot of cash holdings, nowhere to put it. Do you have to jump on a plane to Nassau? How do you conduct your transactions without a bank present? How do you bank?”

Mr Simms said he had written to the Clearing Banks Association, copying the Central Bank and Ministry of Finance on the issue, as to why the banks - especially those Canadian-owned - had been unable to implement a common online platform, connecting all institutions, in the Bahamas when the same had been present in the US and Canada for 10-20 years.

And, given the negative social implications of web shop gaming, the Chamber director said better data and statistics were needed to address problems such as gambling addiction.

“It’s my understanding that part of the Gaming regulations and Act have mandated the web shops to do educational initiatives on the effects of gaming and gambling addiction,” he said.

“I’m not sure who monitors that and oversees the actual implementation and effect of it. We need to be able to monitor things, and have better data and statistics to speak to these things intelligently.”

Mr Simms continued: “It’s a social issue, and every island I visit, people are concerned about it [web shop gaming]. The effects of gambling addiction are affecting other persons in the community in that they have to help people out by putting food on the table, feeding their children or give them lunch money.

“It’s a social challenge that has to be addressed.... It’s a conversation we need to have. They’re [the web shops] offering a service in one breathe, but on the other we have a social issue on the islands. We have to weigh them up. The social issue is long-term, and we will only see the effects 15 years down the road.”