The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Attorneys for the domestic gaming industry yesterday questioned why the Canadian-owned commercial banks would happily accept casino-related deposits while rejecting those of web shops, even though the latter faced “more restrictions”.

Alfred Sears QC, attorney for the Gaming House Operators Association, continued to highlight what web shops believe are the ‘double standards that Canadian-owned banks are employing towards a sector poised to be legalised.

The three Canadian-owned banks - Royal Bank of Canada (RBC), CIBC FirstCaribbean and Scotiabank - have all argued that their global policies prevent them from accepting deposits/monies derived from interactive or online gaming.

Mr Sears, though, questioned whether the banks were applying the same policies towards the likes of Atlantis and Baha Mar, given that both destination resorts are already engaged in interactive gaming.

And, given that both properties were accepting interactive (online) business from persons outside the Bahamas, the former attorney general suggested the casinos represented a potentially greater risk because of the international exposure they represented.

Tribune Business was separately able to verify that the Bahamas-based subsidiaries of the Canadian-owned commercial banks are indeed accepting casino-related deposits from this nation’s mega resorts.

However, a high-level banking source, speaking on condition of anonymity, told this newspaper that this resulted from long-standing relationships built up over decades between bank and casino.

All Bahamian casinos, they added, were constantly being assessed by the banks’ own teams to ensure their Know Your Customer (KYC) and anti-money laundering procedures matched the banks’ standards for high risk customers.

And the executive also expressed concern over the origin of web shop gaming houses’ funds, disclosing that the banking sector feared some of these monies may have been obtained when the industry was still ‘illegal’.

Yet Mr Sears told Tribune Business of the banks: “If they are doing business with Atlantis, and doing business with Baha Mar, how could their position be that they will not do business with anyone engaged in interactive gaming?

“Baha Mar intends to go into gaming on a wider scale than Atlantis, and a significant proportion of their business is interactive gaming.”

The Gaming Act and accompanying regulations permit licensed domestic web shop operators to offer two types of games - numbers and interactive gaming.

Their customer market, though, is limited to so-called domestic players (Bahamians and residents), and those over the age of 18.

And web shops must meet numerous Gaming Board technical requirements, such as maintaining the host server in the Bahamas, when it comes to interactive gaming regulation.

Mr Sears pointed out that all games offered by licensed domestic web shop operators must be approved by the Gaming Board, and that these - and all related equipment - have to be tested and pre-certified by an internationally-approved gaming laboratory.

This means domestic web shop operators will be subject to the same procedures, testing and regulatory processes as Bahamas-based casinos. Yet it appears this all counts for nothing in the commercial banks’ eyes.

“It’s a regulated environment,” Mr Sears told Tribune Business, “the same way as casinos. All of their employees have to be approved, the key employees approved.

“If the standard of due diligence and supervision was less than the casinos, I could understand it [the banks’ position].

“The domestic gaming house operators have more restrictions on them than the casinos.”

Mr Sears also emphasised that licensed web shop operators are prevented by the Gaming Act from opening accounts online. They are required to see the beneficial owner physically, and conduct due KYC due diligence involving passport, driver’s licence and National Insurance Board (NIB) number.

Yet he pointed out that the hotels’ casinos conducted interactive gaming with persons outside the Bahamas, plus visitors who were in this nation for temporary period.

“If they maintain the position they are taking with respect to gaming house operators, they have to take an even more restrictive position with the casinos,” Mr Sears told Tribune Business.

“The casinos have an international exposure for the jurisdiction. If your system is risk-based, you ought to have a more stringent KYC for the casinos than the domestic gaming operators. Compliance is always risk-based.

“It’s a very curious position,” he added of the Canadian-owned commercial banks. “If you carry the argument through to its logical conclusion, they cannot do business with Atlantis and Baha Mar.”

Tribune Business’s contacts yesterday confirmed the Bahamian commercial banking industry, including those institutions that are Canadian-owned, do accept deposits - and conduct transactions and business - with the nation’s casinos.

However, they argued that this was the product of long-standing relationships with established clients who had conformed with all Bahamian laws.

Clearly seeking to draw a distinction between the casinos and the web shops, one banking source said the Canadian institutions faced two issues.

One was the “high risk” nature of online gaming from a compliance/anti-money laundering perspective, which made it a sector to avoid.

And then there was the uncertainty over whether web shop-related deposits would involve monies dating from the pre-legal era.

Acknowledging that commercial banks dealt with casino-related deposits as part of the services they offered the mega resorts, one source said: “Most banks have to ensure that their [the casinos] high risk KYC, compliance standards are as least as stringent as theirs’.

“Teams go through a process to make sure their processes are up to the bank’s global standards.”

Mr Sears, though, did little to disguise his suspicions that the banks’ stance is motivated more by the desire to eliminate the competitive threat posed by web shop operators, many of whom have emerged as rivals in the loan/credit market.

Only Bank of the Bahamas has said it will accept web shop deposits, after receiving clearance from its US correspondent bank, J P Morgan Chase.