Cracking down on unlicensed firms is paying off for the Central Bank, with the governor saying the number of questionable entities has reduced year-on-year.
Wendy Craigg told Guardian Business that notifying the public about the fraudulent firms that exist in the country has been effective thus far. Coupled with a concentrated effort from the bank, she is reporting a reduced number of listings over the last few years.
"Central Bank started posting names in June 2002," Craigg said.
"From our website, you will see that posting from 2002 to 2005 were more prolific - averaging about 12 names per year, but subsequently reducing to about 3. However, fraudulent banking activity continues to be pervasive on an international level."
Craigg also said that remaining consistent in its efforts to identify unlicensed firms internally that may pose a risk to Bahamians has paid off, evidenced by its Warning Notices that are published on its website every time one surfaces.
"A warning notice is issued each time a new scheme is brought to our attention, where an entity is promoting itself as if authorized to carry on banking and/or trust business in The Bahamas," Craigg said. "The individual warning notice is accompanied by an updated consolidated listing of previous warnings (our Cumulative Warning List)."
According to Craigg, the first indication that a firm may be fraudulent is when it identifies itself as a bank or trust - words that are protected under the Banks and Trust Companies Regulation Act of 2000. Such shady firms also use a postal and street address that cannot be physically located or belongs to another business, and sometimes images and likenesses of another licensee may be used.
To date, only one new unlicensed firm has been listed for the year, compared to 2011 where four questionable entities surfaced. The last time the bank's warning notices reached double digits was in 2005, where 11 new firms were identified.
While Bahamians may be less susceptible to the firms in question because they are familiar with the banks and trusts that exist in the country, Craigg admitted that international parties might be more at risk.
"We find that it is the international public community that is most likely to fall victim to such schemes, as they look to offshore investment vehicles; residents will more easily recognize false names and locations, given the relatively small size of the operators in the domestic market," she said.
Keeping the communication lines open between regulators and law enforcement will be the key to eliminating such firms according to the Central Bank governor, in addition to maintaining its low tolerance policy towards illegal operations.
The list of unlicensed firms can be found on the Central Bank's website.

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