'Sanctions threat' from web shop taxation hike


Tribune Business Editor


The prime minister has been warned by the Caribbean's former top financial regulator that The Bahamas faces the "considerable danger" of sanctions from the web shop gaming tax hikes.

Calvin Wilson, the immediate past executive director for the Caribbean Financial Action Task Force (CFATF), last night warned Dr Hubert Minnis that The Bahamas could face renewed anti-money laundering sanctions if the industry was driven "underground" by its new tax structure.

He indicated that the emergence of concerns over an expanded gaming "black market" were especially ill-timed given that The Bahamas is currently being reviewed by the CFATF's parent, the Paris-based Financial Action Task Force (FATF), to determine whether it has sufficiently addressed the regulatory weaknesses identified in its last evaluation.

That evaluation, conducted by a CFATF that Mr Wilson headed for 19 years, noted that The Bahamas' own Financial Intelligence Unit (FIU) had identified "illegal gambling" as one of the main offences relating to money laundering.

Acknowledging that web shops had been legalised, the CFATF report said implementation and effectiveness of their regulatory regime still had to be assessed. Mr Wilson, in his letter to the prime minister, warned that The Bahamas may have to address the "illegal gambling" issue within a matter of days as part of the FATF process - just as concerns over a tax-driven expansion of this problem were resurfacing.

Mr Wilson, a former banker, barrister and UK Crown prosecutor, called for an "immediate intervention" by the prime minister given the potential implications of the new web shop taxation regime for The Bahamas' standing in the fight against financial crime.

His June 10 letter, a copy of which has been seen by Tribune Business, warned: "A bitter legal action is threatened premised on discrimination, expropriation, breach of legitimate expectation, unreasonableness, unfairness, lack of empirical analysis and the absence of consultation with stakeholders.

"There is also some opinion that one of the unintended consequences of the Government's approach may be the expansion of the existing 'black market' gambling houses, which may expose the Bahamas to possible international sanctions.

"And it is on this point that there is considerable danger of a possible resumption of international sanctions. With the benefit of valuable information which was available to me whilst at the CFATF, and with the Bahamas' national interests uppermost in mind, I would like to urge your immediate intervention, honourable Prime Minister, for an expeditious resolution of this matter given events that may transpire at the FATF in a few days."

Alfred Sears QC, attorney for the Bahamas Gaming Operators Association, warned in a May 31, 2018, letter that the proposed Budget tax hikes on the web shop industry threatened to drive the "numbers" business underground where it would be harder to regulate - a development that would attract the attention of sanctioning international regulators.

The Association's own study, by 10-year gaming industry veteran and accountant, Gavin Hamilton, suggested that the increases, and their impact on the seven licensed web shop chains, would drive 30 per cent of the industry's existing customer base to an 'underground black market' which already accounts for 15 per cent of domestic gaming business.

Members of the former Christie administration have also warned that the Government's plans will take the sector back to where it was pre-legalisation in 2014, an outcome they say will be counterproductive to the intent behind that move.

Mr Wilson, meanwhile, said the revival of such concerns was poorly timed given that the Bahamas is in the midst of addressing the deficiencies in its anti-money laundering/counter terror financing regime identified in last year's CFATF.

While it was unclear whether the Bahamas had given such a report at the recent CFATF plenary, Mr Wilson said the country had also "met the criteria to be reviewed" by the FATF's International Cooperation Review Group (ICRG) - a process that was previously confirmed to Tribune Business by Carl Bethel QC, the attorney general.

This review is due to complete this month, and the ex-CFATF executive director said the process gives countries a year to rectify deficiencies or "face further and detailed scrutiny in the coming months" and be subjected to FATF public statements and inclusion on its IRCG Compliance Document.

Warning that this could bring "international reputational risks", Mr Wilson recalled how the Bahamas spent $35 million to escape its original 'blacklisting' in 2000, paying "a significant price" for doing so.

He added: "Given the current heated national debate on the proposed tax increase to be imposed on the gaming sector, apparently without objective expert analysis and stakeholder consultation, the potential flight of gaming operations to the 'black market' arena and the flagging of illegal gaming as one of the top predicate offences by the FIU, the Bahamas could be called upon to address this issue with its regional and international counterparts in a few days.

"Therefore, any significant change to the taxing architecture of domestic gaming should be supported by expert analysis and stakeholder consultation to ensure there will be no increase in existing 'black market' illegal gambling and other money laundering vulnerabilities in the Bahamas."

Web shop operators have warned that the reduction in locations and winnings payouts, as a result of the tax hike, will further push patrons into the arms of 'underground' gaming. They have argued that the Government is comparing "apples and oranges" by basing the sector's new tax structure on what exists in markets such as Florida and Macau, which they allege are not comparable to the Bahamian industry's structure.

Mr Wilson said that, in the circumstances, it was "in the Bahamas' best interests if the current impasse" between the Government and gaming industry was "settled as expeditiously as possible" via dialogue.

"If it is indeed correct that the Bahamas will seek to exit the FATF ICRG this month, then there must be no impediment or detracting information that could preclude the Bahamas from doing so," he wrote.

Warning that the Bahamas was at "a critical juncture", Mr Wilson added: "All national efforts must be directed to towards urgently moving past this impasse through creating the climate for dialogue so that an appropriate level of tax could be determined for the gaming sector and, importantly, removing any possibility of a return to black market illegal gambling operations given the potential negative implications for the Bahamas' international reputation at this very sensitive time."


bogart says...

If the web shops dont get their way former financial CFATF advises Roc wid Doc of money laundering activities if dey go 'underground'

There is no place in the Bahamas that could be considered 'underground'.....expert might be expert in finamce but he aint know that Roc wid Doc been to he University of Wulff rd ehere every jook jook corner is known an aint nobody goin underground .....everyting is known including all who sweetheartin who....right down to the childe pa is....without DNA test...tek dat financial expert fer not knowing yer backyard, short cut, track road, every guinep, mango, dilly, juju tree an when it bearing ....sides every general know who yer family is and how many votes in every house in every neighbourhood.

Posted 11 June 2018, 2:21 p.m. Suggest removal

DDK says...

And here we go!!!!!! A Paris based regulator! Ain't "globalization" grand?

Posted 11 June 2018, 2:27 p.m. Suggest removal

Aegeaon says...

This is a joke.. How can webshops do that and screw the government over like this? They're just a bunch of rotten cheaters and you have to let them win. First we voted no and they destroyed democracy to be operating, then they're sanctioning a government for taxing them accordingly. If they think they can't be destroyed when they run underground. That will be their undoing.

What if I was a CIA agent responsible for tracking Sebas and Flowers' own bank accounts, and happen to stumble onto a money transfer with someone from Al-Qaeda or ISIS. They say there's no cases of laundering money? Lie, the number boys brought the police officers out.

Posted 11 June 2018, 4:17 p.m. Suggest removal

DaGoobs says...

Yeah KP Turnquest, to be forewarned is to be forearmed. Tax Flowers and Sebas up to 50% of their revenues and make 76% of the gambling public unhappy or cave in to them and let them go underground and risk driving the final nails in the coffin of what's left of our financial services sector? Tough choice ain't it?

Posted 11 June 2018, 10:51 p.m. Suggest removal

Aegeaon says...

Nah. It's the fact that the number boys ran their business illegally, subverted democracy and they're still here. With no comprehensive investigation into their bank accounts, it's clear that the police is bribed or they didn't cared at all. Again, what's the bet that they're using those accounts to deal with terrorist cells because of no transparency.

Calling them to sanction the government and run underground means that they're a bunch of entitled, criminal dealing fools that got to where they are easily, and they're still ruining the banking service industry.

Posted 12 June 2018, 12:26 a.m. Suggest removal

The_Oracle says...

Legalizing them without first prosecuting and seizing illegal revenues first, created this problem.
Licensing the same operators over was a second mistake.
Not creating National lottery was a missed opportunity.
I am starting to think there is a lot of missing aptitude in Government.
Drinking the purple kool-aid don't help.

Posted 12 June 2018, 11:28 a.m. Suggest removal

TheMadHatter says...

Tell Mayor Hidalgo to crawl back into the cave she came out of. She is one of the stupidest people alive today. She should concentrate on the young French women who are being raped by Muslim gangs. But obviously she hasn't enough sense nor scruples for that.

Posted 12 June 2018, 12:45 p.m. Suggest removal

Well_mudda_take_sic says...

Calvin Wilson, who is not even the current director of the CFATF, was goaded into writing the threatening letter he wrote to Minnis by none other than Alfred Sears, a business partner of His Majesty King Sebas Bastian and His Royal Highness Sir Craig Flowers. And pray tell, why does Wilson think he somehow has the right to meddle in the sovereign affairs of the people of the Bahamas. It certainly begs the question as to whether he has 'ties' to the larger Caribbean cartel of numbers bosses. Wilson's line of thinking is fundamentally flawed in as much as it presupposes the low-life racketeering thugs like King Sebas and Sir Craig have the ability to take their operations underground notwithstanding all of the very costly new laws and regulations we have now put in place at the 'behest' of the U.S. FATF, CFATF, OECD, IMF, etc.to fight money laundering and other illegal activities. Is Wilson somehow now implying that all of these very costly new laws and regulations we put in place will fail to keep the dirty ill-gotten unjust riches of the numbers bosses out of our banking system and the global banking system?! Wilson needs to have his head examined and certainly should stop kowtowing to the wishes of the likes of Alfred Sears who is now a well entrenched de facto business partner of King Sebas and Sir Craig.

Posted 12 June 2018, 1:03 p.m. Suggest removal

Well_mudda_take_sic says...

*Repost:* Let's not forget too that His Majesty King Sebas Bastian and His Royal Highness Sir Craig Flowers were well known criminal thugs before the last Christie-led corrupt PLP government issued them with licenses purporting to somehow legitamize their past criminal conduct and ongoing money laundering and other illegal activities. In fact, His Royal Highness Sir Craig Flowers was convicted of his criminal activities but the corrupt PLP government later arranged for his criminal record to be expunged by the court so that he could be deemed a fit and proper person to receive a web shop gaming license. Remember, at that time the courts and the handling of all criminal prosecutions were effectively under the control of the most Evil Wicked Witch of the West, namely Allyson Maynard-Gibson. But everyone knows these two low-life thugs each had a long criminal background pre-dating the receipt of their bogus licenses during which time they amassed huge fortunes from their illegal operations over many years. Since receiving their bogus gaming licenses they have been blatantly laundering their ill-gotten and unjust riches at a blistering pace in the expansion of their criminal empires which are destroying the social and economic fabric of our society. Yes indeed, we now desperately need a tax-free national lottery.

Posted 12 June 2018, 1:07 p.m. Suggest removal

John says...

You mean ta tell me, dat dere is laws or regulatory bodies that operate in fairness to indigenous, hard working Bahamians? Either tax the casinos too, equally, or let my people go! ....wait for it....

Posted 12 June 2018, 1:39 p.m. Suggest removal

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