The Tribune

THE Gaming Board’s “blue ribbon” reputation has been hurt by taking on regulation of the “Wild Wild West” web shop sector, the Attorney General said yesterday.

Carl Bethel QC told Tribune Business that the Government was now seconding more experienced anti-money laundering regulators from other agencies to the Gaming Board in a bid to get to grips with a sector deemed “high risk”.

He pledged that the Government will also move rapidly to deal with the use of web shops as unlicensed money transfer businesses by some Bahamians, pointing out that not all operators had taken action to prevent this. The Bahamas’ newly-released National Risk Assessment (NRA) on financial crimes described the web shop sector as being at ‘high risk’ of being abused by money launderers, and persons seeking to conceal the proceeds from drug, immigrant and gun trafficking.

“The domestic gambling house business was identified as having a high level of exposure to money laundering risk due to the potential of laundering funds from locals who are involved in drug, human and gun trafficking, and the need to fully risk assess the sector,” the NRA report said.

It called for a “review and risk assessment” of the money laundering/terrorism financing risks posed by web shops, while acknowledging that the sector posed little threat on the latter due to exchange controls and the fact its business was confined within the Bahamas’ national borders.

“That is a high level of risk,” Mr Bethel said of the web shops. “We are aware of that, and are working very closely with the Gaming Board. What we have requested.... let me put it this way.

“Historically, the Gaming Board was a blue ribbon regulator and considered by the world to be such. It was highly regarded through its oversight of casino gaming, and was sought as a reference point in other jurisdictions.

“In terms of casino gaming, it still has high prestige. The difficulty is they were handed with this Wild Wild West regulation of the local gaming houses under the PLP’s Act [Gaming Act 2014], and that created some difficulty for them.”

Mr Bethel’s comments indicate that the Gaming Board has struggled with a dramatically increased workload following the legalisation, then regulation, of web shop gaming by the former Christie administration in 2014-2015.

Concerns have been expressed over whether it has sufficient skills and capacity to now fulfill its mandate, especially given the gaming industry’s evolution to a technology-driven model that is constantly devising new games.

The Gaming Board further downsized recently by shedding another 30 employees in addition to the 18 staff let go in November, leaving many to wonder about the future direction of such a critical regulator.

Mr Bethel, meanwhile, said the Government planned to build the Gaming Board’s capacity to fight financial crime by transferring more experienced anti-money laundering regulators to it from other supervisory bodies.

“One of the ways we are seeing to address that is to have the more experienced regulators for anti-money laundering issues work with them to spread knowledge and capacity build at the Gaming Board,” the Attorney General told Tribune Business.

“We’ve insisted the more experienced regulators cross-fertilise and share with these other regulators coming on stream their insights and disciplines of anti-money laundering supervision.

“There will be very tight regulation of electronic systems and operations. Some of the [web shop] operators have not yet prevented the use of their machines for moving money. That issue is going to be addressed forthwith.”

Dionisio D’Aguilar, the minister responsible for gaming, had previously expressed concerns that the Bahamas could again be ‘blacklisted’ if the web shop industry continued acting as unlicensed money transmission businesses enabling Bahamians to move money around this country.

In response Island Luck, one of the largest operators, publicly announced it would close down accounts being used for money transfer rather than gaming purposes, and take steps to prevent this in its business. No rival web shop chains, though, have given such commitments.

Mr D’Aguilar also provoked an angry response from the Gaming House Operators Association when he criticised the sector’s due diligence and Know Your Customer (KYC) processes, with the web shops saying they required proof of identity and address from all customers. The Minister, though, said they did not check a client’s source of funds.

The NRA, meanwhile, called for an assessment to determine whether the Bahamas Real Estate Association’s (BREA) self-regulatory powers need to be strengthened “regarding unauthorised real estate businesses and capture of land developers”.

“There are several reports, not that we have any evidence to prove anything, of lax operations on the land development side that ought to be brought into compliance,” Mr Bethel added. “We can’t have cash-based land transactions.”

The Attorney General added that a lack of suspicious transaction reports (STRs) in ‘high risk’ sectors would trigger “a tightening up” in those sectors.

“These things have to be addressed consistent with the ease of business, but not with the slackness of doing business,” he told Tribune Business.