By NEILL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas-based commercial banks must “debunk the theory” it is too hard to open accounts with them, a senior executive argued yesterday, while conceding the industry “should shoulder some criticism” for failing to fully educate residents on digital financial services access.

Gowon Bowe, the Clearing Banks Association’s (CBA) head, told Tribune Business that the Gaming Board’s crackdown on the use of web shop accounts as alternatives to the banks for moving money further exposed the need to better inform Bahamians and residents of legally permitted tools, such as the Sand Dollar, the Central Bank-backed Bahamian digital dollar, and the soon-to-launch ‘basic bank account’.

Conceding that some will argue the commercial bank exit from many Family Islands drove businesses and residents in those locations to use the web shops, as they sought convenient, low-cost and relatively safe ways to deposit, withdraw and move money through every-day financial transactions, he added that it was vital that banks and regulators partner to address “perceptions” that it is still too expensive, time-consuming and challenging to open regular bank accounts.

Mr Bowe, revealing that his Fidelity Bank (Bahamas) is “on the verge of opening Eleuthera offices” to go with its existing Exuma presence, with Cash n’Go set to again act as its “cash partner”, he told this newspaper that the BISX-listed lender is now regularly visiting other Family Islands to on-board new clients, open accounts and conduct the necessary Know Your Customer (KYC) due diligence, with debit cards following swiftly behind.

Speaking after the Gaming Board warned it may take “further regulatory action” against companies and individuals using web shop accounts for non-gaming purposes, Mr Bowe acknowledged that persons will blame this on the commercial banking industry’s withdrawal from many Family Islands to leave residents with no alternative for maintaining financial services access and conducting regular transactions.

“Many would argue that the use of these gaming accounts for transaction purposes was the absence of availability by the commercial banks,” he said. Mr Bowe said the use of web shop gaming accounts to conduct financial transactions has “always been prohibited” and monitored by the Gaming Board, which has now likely seen such activities increase to the point where it has little choice but to act.

“The other thing the Gaming Board indicated is that the volume of activity, which they are monitoring because they have the systems, is at volumes that are of concern to them,” he added. “But in terms of compliance and enforcement, it’s not so much going to have the spillover back to the commercial banks.

“You are going to find many people lobbying to say this was done because of the absence of the commercial banks. You are going to get a fair amount of that, particularly with MPs from the Family Islands, who are going to argue that while their constituencies have numbers houses but not commercial banks.”

However, Mr Bowe asserted that many of those described by the Central Bank of The Bahamas as “unbanked”, meaning they have no bank account and lack access to regular financial services, are in this category by personal choice rather than circumstance.

“Persons have created perceptions of difficulties with opening of bank accounts because of experiences in the past, and have sought easier routes to move money… This affection with cash being available, and gaming houses have cash on hand, allows them to put cash in, take it out.”

The Fidelity Bank (Bahamas) chief said the commercial banks need to work with the Central Bank, Gaming Board and other regulators to convince Bahamians they, too, can move money electronically just as easily - and at similar cost - to the web shops via Sand Dollar and proposed ‘basic bank account’.

“There are no persons here legally who should have a difficulty with opening a bank account in The Bahamas,” Mr Bowe told Tribune Business. “The perception there is difficulty is more the perceived reality based on past experience versus the reality of current experience, and we have stations on some of the islands..

“The banks have to take some responsibility. On the closure of banks across the archipelago, it was not done with the level of education that was needed” even though digital channels were in place to facilitate consumers in conducting regular financial transactions.

“It’s one where the banks should shoulder criticism for not appropriately preparing individuals,” Mr Bowe said. “This one is going to be a very emotive topic. There’s no gaming house that will acknowledge the industry is used for this purpose, and no patrons will admit to doing so.

“But you will find quiet rumours saying this is because of the absence of commercial banks, and we have to debunk that theory by demonstrating the same banking services are available electronically not just the traditional way.”

Mr Bowe said Fidelity Bank (Bahamas) “bank in a box” initiative was providing financial services access to consumers on islands such as Long Island, Andros and Bimini, with visits once every two months facilitating the opening of bank accounts. “The reality is how many people take advantage of that?” he added. “More and more people do, but they find it easier to use gaming accounts.”

The Gaming Board, in its notice about “the proper use of accounts” held with licensed web shop operators such as Island Luck, Chances and Asure Win, added that some are using these as alternative, or de facto, bank accounts to conduct every-day financial transactions instead of for gaming purposes.

“The Board has found that some patrons are using their gaming accounts for purposes other than gaming, including facilitating deposits for non-gaming related services and, subsequently, withdrawing such deposits without conducting any gaming transactions,” the Gaming Board said.

“Therefore, the public is hereby advised that accounts held with licensed gaming house operators are only for authorised gaming activities. These accounts must not be used to receive or hold funds for any other business or commercial reasons. Using these accounts for non-gaming purposes may lead to an investigation and further regulatory action by the Board.” The nature of any “regulatory action” was not specified, but it will likely involve closing such accounts down.

The Gaming Board’s crackdown on how web shop gaming accounts are used is likely linked to the upcoming assessment of The Bahamas’ anti-financial crime regulatory regime - and its effectiveness - by global standard-setters.

Caribbean Financial Action Task Force (CFATF) representatives are due to undertake the fifth mutual evaluation of this nation’s anti-money laundering, terror financing and nuclear proliferation funding defences in October, and Bahamian regulators and the wider financial services industry have been working feverishly to prepare for this. Any misuse of web shop gaming accounts could this undermine the assessment that The Bahamas receives.