The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank of the Bahamas is “still evaluating” the Gaming Bill 2014 and accompanying regulations/legislation to determine whether they conform with international anti-money laundering standards, Tribune Business was told yesterday.

Wendy Craigg, the Central Bank’s governor, said the banking sector regulator had only “recently” obtained a copy of the legislation and was still reviewing it.

“We’re still evaluating it,” Mrs Craigg told Tribune Business in a brief interview, when asked if the Gaming Bill and accompanying package would satisfy the Central Bank’s, and banking sector’s, concerns over web shops and accepting their deposits.

“We’re evaluating it. We’re reviewing it. We recently got a copy of it.”

Mrs Craigg added that the commercial banking industry, which has expressed concerns and reservations about accepting deposits from even a regulated, legalised ‘numbers’ industry was doing the same as the Central Bank.

The Governor said she would be able to say more next week, as did the Clearing Banks Association - implying that it is reserving its comments until the Bill passes the House of Assembly and debate there is finished.

However, one senior banker, speaking on condition of anonymity, confirmed that the industry was still waiting to see the legislation.

They suggested that the banks had yet to be briefed on the outcome of Attorney General Allyson Maynard-Gibson’s trip to Paris, where she met with the Financial Action Task Force (FATF), both to get its blessing and feedback on the web shop regulating legislation.

“We’re waiting on the sidelines for the penny to drop,” the banker said.

Several banks, particularly the Canadian-owned ones, had previously suggested they would be unlikely to accept deposits from a legalised web shop industry, with Royal Bank of Canada’s global internal policies preventing it from dealing with money generated by Internet gaming.

The Bahamian-owned banks, particularly Commonwealth and Fidelity Bank (Bahamas), have also expressed reservations for fear that accepting web shop deposits could jeopardise their US correspondent banking relationships,

Mrs Craigg’s comments, meanwhile, raise questions as to whether the Central Bank was consulted on the Gaming Bill package and asked to give its approval.

It would be odd if it was not, given that the Governor was among those who had expressed concern that an unregulated web shop industry - functioning as a parallel, unsupervised banking system and taking in millions of dollars - could lead to this nation being ‘blacklisted’ again for money laundering deficiencies.

Indeed, several Cabinet ministers have cited her comments to back the Government’s decision to perform a u-turn, reverse course and go against the January 2013 ‘no’ vote against legalising web shop gaming.

Obie Wilchcombe, minister responsible for gaming, told the House of Assembly in tabling the Gaming Bill for its first reading: “My Government’s position on the regularisation of web shop gaming has evolved as a result of certain realities which have emerged, following the outcome of the referendum on this issue.

“These realities can no longer be ignored. The Governor of the Central Bank has drawn attention that web shops operators were acting as bankers and hiring bank employees for this purpose.

“Concern has been expressed with regard to the violations of the country’s international obligations, which could have severe consequences for the Bahamas’ vital financial services industry.

“After wide consultation, and in order to preserve and protect the national interest, my Government has decided that the right thing to do in the circumstances is to regulate web shop gaming.”

In e-mailed responses to Tribune Business’s questions earlier this year, Mrs Craigg said that while the existence of illegal web shop gaming, in and of itself, would not lead to this nation being ‘blacklisted’ again for money laundering weaknesses, failure to enforce existing laws might.

“To say that the Bahamas is in danger of being ‘blacklisted’ on the issue of web shop gaming, alone, does not take account of measures which the jurisdiction has in place to mitigate the potential money laundering risk posed by web shop activities,” the Central Bank governor said.

“However, it remains for the policymakers to address this outstanding issue in a manner that reduces the jurisdiction’s vulnerability to the continuance of unregulated economic activities in the jurisdiction.”

She acknowledged that the Central Bank had increasing concerns about the web shop gaming industry’s seeming evolution into a parallel, unregulated banking system offering mortgages and pay day loans.

Mrs Craigg added that anecdotal evidence showed lending activities by web shops appeared to be “significant”, and was something that threatened to destabilise both the formal, legal banking sector and wider Bahamian economy.

Ian Jennings, Commonwealth Bank’s president, had also told Tribune Business that the Bahamas risks being ‘blacklisted’ again by the G-20 nations due to the potential money laundering risk presented by the web shop gaming industry.

“It’s the unregulated extension of credit and, probably of greater concern, is the movement of funds outside the banking system and the potential for money laundering,” he added.

“We got blacklisted before, and this has the potential to put us right back there if not controlled. It’s an exposure for the country. I don’t think any one of us wants to go back to that [blacklisting]’.”