The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday pledged to tackle the “pain spot” suffered by many Bahamian companies over the difficulties encountered in opening bank accounts.

John Rolle told Tribune Business that the regulator may seek the Government’s support to ensure that due diligence information sought by commercial banks on potential corporate customers can be more easily accessed from public sector entities.

“A very important near-term work for us is dealing with the relationship process for business clients,” he said. “That’s a pain spot for the domestic sector. We are looking at how that process can be much more improved even to the extent, if necessary, of getting support from the Government level as to how to strengthen some aspects of the information infrastructure.

“We do know a lot of layers are, in effect, involved in establishing relationship and have to do with getting documents. We are pushing to get the system more able to provide more secure, reliable information to financial institutions.

“There are parts of the public information infrastructure that we will also be looking at, and how we can address some of the issues involved in establishing business relationships. It comes back to two parts of customer due diligence,” Mr Rolle continued.

“We’re focused on having financial institutions focus on establishing the relationship, the practices of the customer, and then how they monitor the activity of the customer so the due diligence doesn’t lead to unnecessary barriers or exclusion from financial services. We kind of call it the financial inclusion element.”

Agencies such as the Department of Inland Revenue (DIR), National Insurance Board and public utilities such as Bahamas Power & Light (BPL) all hold information that could assist Bahamian commercial banks in performing the necessary Know Your Customer (KYC) scrutiny when opening bank accounts for local companies.

The Bahamas’ first credit bureau, which is close to fully launching, may also be able to assist in this process as it will act as a repository that collects much of this information to enable it to produce “scores” on borrowers’ creditworthiness. Any information sharing, though, will have to comply with the Data Protection Act’s provision.

Complaints about the red tape, bureaucracy and delays in establishing Bahamas-based bank accounts have been constant ever since this nation was forced to implement its present KYC structure as part of legal reforms to escape the country’s 2000 ‘blacklisting’ by the Financial Action Task Force (FATF).

Philip Galanis, the HLB Galanis & Company managing partner, recently blasted the commercial banking industry for “treating Bahamians like criminals” when it comes to opening account facilities. He argued that many felt they were treated as guilty until proven innocent, with protracted KYC scrutiny and associated delays undermining the ease of doing business.

“I can walk into any bank in the US and Canada and come out 15 minutes later with a bank card having opened an account,” the former PLP MP and Senator told the Bahamas Institute of Chartered Accountants (BICA) accountants’ week seminars. “Bahamians are treated like criminals at the bank.

“I think it’s wrong, it’s unconscionable and certainly doesn’t help businesses incorporate and assist in opening bank accounts for our clients. There must be something we can do to remedy the situation.”

And, after Charles Littrell, the Central Bank’s inspector of banks and trust companies, responded by saying Bahamian banks had improved the account opening process, Mr Galanis replied: “With all due respect, I think the banks are not paying attention to the Central Bank’s recommendations and directives because they have not relaxed their account opening requirements.

“Canadians in Canada do not have to face the scrutiny we face here in The Bahamas. Canadians do not have to face the difficulties we do. It makes it very difficult to do business in The Bahamas, and leaves a bad taste in our mouths that we’re almost criminals until proven otherwise.”

Mr Rolle spoke as the Central Bank yesterday unveiled results from an anti-money laundering survey of its licensees, which include money transmission businesses and credit unions, as well as banks and trust companies.

The regulator said the findings showed Bahamas-based financial institutions are “considerably less impressive” in training their Boards and directors on anti-money laundering and counter terrorism financing issues than they are their staff.

“The domestic banks are effectively maintaining their required staff training, but are considerably less impressive on director anti-money laundering training,” the Central Bank noted. “In 2020, 98 percent of bank staff received the relevant training, compared to 95 percent in 2019.

“Although 82 percent of directors of the domestic banks received the relevant training in 2020, one bank reported that none of their directors received training during this period. All other domestic banks reported that all of their directors were trained. The Central Bank will work to ensure that staff training intensity is maintained, while director training is improved.

“In common with the domestic sector, the supervised financial institutions reported high compliance on staff training, and less successful compliance on director training. Well over 90 percent of staff within the sector had some type of the required training during 2020. Only one [institution] did not conduct the relevant training during 2020.”

A similar conclusion was reached for the credit unions. “Over 90 percent of staff received the required training in both 2019 and 2020. On the other hand, only 75 percent of directors received training in 2020,” the Central Bank added. “This is another area where COVID-19 issues may have made 2020 an outlier.”

Similar issues were uncovered at money transmission businesses (MTBs). “During 2020, the MTBs trained 94 percent of their staff and 79 percent of their agents’ staff,” the Central Bank said of the data collected.

“One MTB reported that only 22 percent of their agents were trained during 2019. One MTB indicated that none of its directors received training. All of the other MTBs reported that all of their directors received training during 2020.”