We are moving toward what the government is calling the "regularization" of web shop gaming. Web shops offer Internet-based gambling. Gambling is illegal in The Bahamas for Bahamians and legal residents. Those who have facilitated gambling for Bahamians and legal residents have engaged in illegal activity. The money they have received from this would be the proceeds of crime.
Attorney General Allyson Maynard-Gibson said yesterday in an interview that web shops will be penalized for revenue generated prior to regularization. In a separate interview, Minister of Tourism Obie Wilchcombe, who has ministerial responsibility for gaming, said, "There will be a penalty for illegal operation, when it was illegal. So we have to penalize them for about six years. And all of that is a part of what we're doing."
We seem to finally be at a place where all are accepting that wrongdoing occurred. Now the issue regards whether financial institutions will be able to accept money from the men who run these businesses the day after gambling is made legal. The answer to that question appears to be "no", as the money that established these businesses came from crime. It is illegal for financial institutions to knowingly accept the proceeds of crime.
In a position paper, RBC (Bahamas) said conducting business with web shops, even once regulated, would cause local banks to run afoul of their parent banks' global policies and U.S. federal law.
Two weeks ago, Commonwealth Bank President Ian Jennings expressed doubt that web shops would be able to meet international standards set out by agencies such as the Financial Action Task Force (FATF).
"It's not as simple as just passing an act to regularize them," Jennings said.
"They (web shops) also have to be seen within an international framework of FATF and various other money laundering issues.
"It goes back to a reputational issue for the jurisdictions, and I think a lot of people don't appreciate that and what may be issues that fall out of that.
"Just regularizing the web shops is not going to get rid of the problem as far as the banking sector is concerned."
Maynard-Gibson, however, expressed confidence that web shops will be able to conduct business with financial institutions in The Bahamas once the government regulates the industry.
The Gaming Bill has not been debated in the House of Assembly, but web shop regularization will be retroactive to July 1. Wilchcombe said the proposed law will be tabled in Parliament next week.
We think the government is being naive and hopeful on this issue. Nothing it has said explains how a responsible and law-abiding financial institution could allow a web shop boss or his company to deposit millions of dollars into that institution without jeopardizing that company's standing.
The government has a problem. It wants to start a legal sector by giving licenses to people rich with the proceeds of crime. Bahamian financial institutions have laws and standards they have to follow. They cannot go along with this and accept the money if they are to maintain their reputations.

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