Report debunks fears gaming houses conduits for money-laundering/terrorism financing
NASSAU, BAHAMAS – The Bahamas Gaming Operators Association (BGOA) yesterday welcomed a report by the Gaming Board which found that continued fears that the regularized domestic gaming sector remains at risk of being conduits for money laundering and terrorism financing have been proven to be “largely unfounded”.
“As the industry continues to evolve and innovate, it is ever minded of its regulatory and legal responsibility to ensure that it always adhered to international best practices and to the rule of law,” said Gershan Major, the CEO of the Bahamas Gaming Operators Association.
“The findings of the report further reinforces the BGOA’s long-standing position that as a highly regulated industry it takes very seriously the execution of its corporate governance policies and procedures as part of the financial services sector.”
The association said it was also encouraged that the Board underscored the fact that gaming houses cannot be used to facilitate international transfers, and no funds flow from outside The Bahamas into patron accounts, nor do funds flow from patron accounts outside the country.
The Board conducted a one-month study of the sectors’ financial data, which was contained in the Group of Financial Services Regulators’ (GFSR) annual Anti-Money Laundering and Countering the Financing of Terrorism report.
The report was published last Friday.
According to the Gaming Board’s study, entitled ‘Bahamian Gaming Houses, Anti-Money Laundering Myths and Realties’ which was compiled by its Chief Counsel Crystal Knowles, “The findings do not support any assertion that gaming houses are conduits for material money laundering.”
In fact, the Board found that the average patron account balance was $5. Meanwhile, the average transaction amount was $60, the report notes.
The study concluded that these sums were “far too small to support any pattern of substantial money laundering”.
At current, there are seven licensed gaming house operators in The Bahamas.
The Board said it plans to implement a comprehensive anti-money laundering audit program and compliance monitoring system for gaming house operators as part of its effort to enhance the level of investigations currently being conducted.
The move is partly in response to the increased requirements of the Financial Action Task Force.
The Board said it is also tasked with ensuring increased compliance to prevent patrons from allowing other people, other than the registered owner of the account, from conducting transactions on the account in question, though the Board did not outline how it proposed to resolve this.
Gaming house patrons, particularly those on the Family Islands where banks have pulled out, have been known to use their accounts as quasi-banking institutions, adding funds to other patrons accounts on other islands to be withdrawn.
However, gaming houses operators, have clamped down on such activities, shutting down accounts that are flagged for such transactions.
Additionally, the Board said as it seeks to strengthen its anti-money laundering guidelines and oversight, it conducted a risk assessment of gaming house operators, inclusive of operators’ organization structure, patron base, patron onboarding and monitoring procedures, suspicious transaction reporting procedures and gaming services offered.
It said the information gathered will be utilized to assist the Board in assessing the size, growth, operations, products, services as well as any money laundering or terrorist financing risk in the domestic gaming services industry.
“Additionally, such information is further positioning the Board to adequately advise gaming house on the inclusion of appropriate measures within their internal control procedures for the purposes of preventing and forestalling money laundering or terrorist financing threats,” the report notes.
In addition to the regulatory overhaul of the domestic gaming sector in recent years, which included licensing operators and the introduction of a suite of comprehensive statutory framework, the report said the Board implemented additional measures to “safeguard the integrity of the gaming industry and protect it from the threats of money laundering and terrorist financing”.
The legislation incorporated a full range of new regulatory requirements related to eligibility for licensing, an operator’s system of accounting and internal controls, responsible gaming, know your customer/source of funds; anti-money laundering countermeasures and independent certification of gaming technology.
It said all of these requirements imposed are comparable to the “most robust North American gaming jurisdictions” and should signal to international observers and banking institutions that the government had the will and ability to impose licensing and operational requirements on the gaming sector consistent with the requirements and protocols on international financial sector watchdogs such as the FATF
“Matched requirement by requirement, the systems operated by gaming house operators comply with technical standards far exceeding any applied to other Bahamians financial institutions,” the report said.
Canadian-owned commercial banks, including Royal Bank of Canada, CIBC, FirstCaribbean and ScotiaBank, refused to accept deposits from regularized gaming house operators, maintaining that their global policies prevented them from doing so.
It remains to be seen how the Gaming Board’s findings will impact that stance.
The Board said it is engaged and making good progress toward reviewing and approving internal controls that will bring about greater monitoring of key statutory requirements, including patron identification, integrity of the patron account, age verification and revenue reporting, among others.