The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Securities Commission is aiming to kickstart the process for drafting a replacement to the Financial and Corporate Services Providers (FCSP) Act before year-end, admitting it will be “challenged” to regulate so-called ‘cash for gold’ outlets.

Hillary Deveaux, the Commission’s executive director, conceded to Tribune Business yesterday that the regulator had found it difficult to fulfill its existing supervisory mandate, especially given its lack of revenue income.

The Securities Commission is already responsible for regulating the Bahamian investments funds industry, plus the capital markets and financial and corporate services providers, and the Government is seemingly seeking to expand these obligations even further.

Besides the likelihood that it will also be tapped to oversee the Bahamian pensions industry, the Christie administration now wants the Securities Commission to take on regulation of the flourishing ‘cash for gold’ and pawnbrokers/second hand dealers sector.

When asked by Tribune Business yesterday whether the Securities Commission would be over-burdened if asked to take on regulating ‘cash for gold’ shops, Mr Deveaux responded: “Let’s put it this way.

“The Commission has historically been challenged with its supervisory responsibilities, and no real accommodating revenue streams to deal with things.

“This [cash for gold regulation] will also be a challenge for the Commission. We will also have to licence, supervise and regulate persons dealing in second hand precious stones and precious metals. We will see how we deal with that.”

The Government is seeking to make the Securities Commission responsible for this sector’s regulation via changes to the legislation governing the Bahamas’ anti-money laundering and terror financing regime.

The former Ingraham administration sought to regulate pawnbrokers, ‘cash for gold’ operators and similar businesses via legislation that was passed in 2011.

However, its successor believes this is not enough, amid suspicions that some in the industry are failing to properly adhere to Know Your Customer (KYC) legislation and facilitating crime by providing a steady source of income for street robbers and those committing home break-ins.

Meanwhile, Mr Deveaux revealed to Tribune Business that the Securities Commission is pushing for “the replacement and repeal” of the existing Financial and Corporate Services Providers Act.

He expressed hope that the process would begin once the Group of Financial Services Regulators (GFSR), which features the Securities Commission and all other industry supervisors, met this quarter.

“We are looking at the FCSP to replace and repeal that legislation,” Mr Deveaux told Tribune Business. “It’s something where we’re going to be utilising the GFSR to develop a process where we go through a review of the legislation, and draft new legislation.

“We’re hoping to commence the process at the next GFSR meeting, which will hopefully be during this final quarter of 2014.”

And Mr Deveaux added: “There are certain activities, particularly with regard to financial services providers, where we may be looking to transfer those activities to other regulators to be supervised.”

Mr Deveaux declined to elaborate further. However, Tribune Business understands that may be a reference to the Securities Commission’s desire for the Central Bank to assume responsibility for overseeing any financial activities related to a legalised web shop industry.

Wendy Craigg, the Central Bank’s governor, previously told Tribune Business that web shops would need to obtain an FCSP licence if they wanted to continue their lending activities post-legalisation.

The Securities Commission, though, feels that web shops would be a ‘better fit’ for regulation by the Central Bank rather than itself.

This is because, apart from lending, web shops are also in the money transmission business, competing directly with the likes of Fidelity Bank (Bahamas) Western Union, Bank of the Bahamas’ Moneygram and the Cash ‘n Go chain.

Money can be sent from one island to another simply by placing it on the recipient’s web shop account. Several sources have suggested the money transmission business is a key reason why some web shop operators have expanded outside the Bahamas, as they are able to undercut established operators on their fees.