A prominent QC has called on web shop gaming operators to establish their own credit union, as blasted the Canadian-owned banks’ refusal to accept the sector’s deposits as making “no sense whatsoever”.

Wayne Munroe  told Tribune Business: “If I were a web shop owner, that would make me upset and, as a group, they could probably look at establishing a credit union and then insist that if you want to do business, you do business with the credit union.

“If it worked in conjunction, or was side by side with their premises, it would have a very strong presence in the Family Islands and could, in fact, potentially put the banks out of business [there]. The banks bank with everyone other than the web shop owners.”

    Mr Munroe has suggested in the past that Bahamian web shop operators could sue Canadian-owned commercial banks for discrimination over their refusal to accept deposits from the sector.

The banks, though, argue that their worldwide policies prevent them from accepting gaming-related deposits, especially the online variety.

CIBC FirstCaribbean, Royal Bank of Canada (RBC) and Scotiabank are all adopting this stance, with an RBC (Bahamas) position paper warning that conducting business with web shops would run afoul of its parent bank’s global policies and US federal law.

Two Bahamian-owned institutions, Commonwealth Bank and Fidelity Bank (Bahamas), are also refusing to deal with the web shop gaming industry, viewing it as too ‘high risk’.

Such fears will have been heightened in an environment where Bahamian institutions, and their counterparts in the Caribbean, are struggling to maintain correspondent relations with developed country banks due to risk-related concerns. Accepting web shop deposits could be just the excuse a correspondent needs to terminate business.

Bank of the Bahamas is the only institution to state publicly that it is doing business with web shops, having received clearance from its own US correspondent bank, JP Morgan Chase, to accept deposits from the newly-legalised sector.

    “A license they could very readily get is a co-operative credit union license because they have a large number of staff across all of them, and participants,” Mr Munroe added of the web shops.

“If I were them it would upset me how the banks discriminate against me, and my mission would be to put as many of them out of business through an alternative financial institution; that’s one option.”

Setting up their own commercial bank is one option that has been mulled by the web shop industry, especially given the large financial sums it recycles.

FML Group of Companies chief, Craig Flowers, has previously gone public with such a suggestion, and has long had a personal interest in banking, at one point eyeying whether to buy a Turks & Caicos bank that was in liquidation.

However, one obstacle to web shop banking ambitions may be obtaining the necessary licences from the Central Bank of the Bahamas. And they may face the same difficulties going the credit union route, as the regulator is the same.

However, Mr Munroe argued:“If I am given a license to do something and then the banks refuse to accept my money and I have to get money in the system, you basically force me to launder money.

“We have a  legalised, regulated gaming industry, yet the banks say that they will accept deposits from web shop employees, which are generated in a web shop, and deposits from third party vendors. But all except the Bank of the Bahamas say that they will not hold established accounts for the web shop operators and that makes no sense whatsoever, especially since they bank with casinos.”

    Mr Munroe acknowledged that the banks do not do online gaming banking for the casinos. “There is a good reason for that, which is - unlike the web shops who have to see their customers who do business in Bahamian dollars, which isn’t convertible currency - the casinos set up accounts online and do business in convertible currency,” he explained.

“If you say it’s too much of a risk to do business with web shop owners, it makes no sense  because  before they got a license they had to disclose the past 20 years of their financial affairs. It’s very easy to establish with the Gaming Board what they say their existing circumstances are.”

Web shops are already competing with the banks, given that they have in the past offered loans. They are also in the money transmission business, with clients able to pick up money from their account on any Bahamian island.

One of the Government’s principal aims in legalising, regulating and taxing the web shops was to pull the industry into the formal economy and commercial banking system, thereby eliminating any regulatory risk to the Bahamas’ reputation.