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Last Updated: Feb 13, 2017 - 1:45:37 AM |
L. Ryan Pinder, MP Elizabeth
Minister of Financial Services
NASSAU, Bahamas
Gaming Bill, 2014
September 10, 2014
Introduction
Today I rise on behalf of the constituents of the Elizabeth constituency to debate the Gaming Bill, 2014 and associated and related Bills which collectively seek to accomplish two primary goals 1) the modernization of our hotel casino industry to ensure competitiveness in the global environment which is fundamental to the success of our international tourism product; and 2) to regulate and provide a legal operational framework for the domestic gaming industry in the Bahamas. Something which I supported and thought should happen even before the referendum.
Related Bills and Amendments also ensure that in the context of the above purposes, regulation of gaming in the Bahamas is compliant with international best practices, in this instance best practices with anti money laundering and counter terrorist financial requirements as prescribed by the Financial Action Task Force in their recommendations.
The Financial Action Task Force prescribes certain recommendations, which are essentially global standards and requirements on the prevention of money laundering and anti terrorist financing. Jurisdictions such as the Bahamas must ensure the protections are in place to ensure adequate due diligence and client knowledge is maintained. The FATF recommendations extend, however, beyond financial services, but identifies other industries where there is concern about exposure to money laundering risks. These include industries such as casinos and gaming. These recommendations of international best practices include compliance requirements for gaming and casinos, including internet casinos. I think it important to note in the area of compliance and anti money laundering, we are not coming up with something new, we are merely ensuring that we are implementing the international recognized norms.
In all instances of applicable regulated industries, and especially in the financial services industry, the Bahamas has demonstrated that we have a firm commitment to be compliant with international best practices, we have been found compliant with anti money laundering requirements, and are continually causing us to remain so. The related Bills and Amendments that are part of this package ensure that to be the case. We cannot afford not to be.
Economic Empowerment
Today as part of this Gaming Bill we create a legitimate and regulated industry that is owned by Bahamians and provide the operational framework for the continued empowerment of Bahamian entrepreneurs in an acceptable environment. Yes, some question the morality of the industry, the gaming industry, however this is not a new scenario. Not only in the Bahamas, but globally there is a history of regulating and providing an operational framework for industries that some might consider as challenging from a morality perspective.
At one time some of the wealthiest businessmen in this country established their wealth through rum running during prohibition. This was a legal enterprise in the Bahamas, illegal in the United States. We saw the alcohol industry be an industry the source of tremendous wealth for both black and white Bahamians. People challenge alcohol as being morally challenged and harmful to society. We witness the expansion of the tobacco industry, some participants who are recognized as global leaders. We have a history of cigar manufacturing and distribution, and we now are witnessing upstanding Bahamian citizens participating in the manufacture of cigarettes. People challenge tobacco as being morally challenged and harmful to society. As we sit here and debate this Gaming Bill, there are many who would advance the notion that Bahamians should be significant investors in the Bahamian tourism industry, including the acquisition of established hotels and casinos, activities that clearly encompasses what we are debating today. This is just another example of ensuring that expansion of industry in the Bahamas has a proper operational framework, creating opportunities for Bahamian entrepreneurs.
Whether you like the individuals or not, one cannot deny that the current proprietors in the domestic gaming industry are successful Bahamian entrepreneurs. With the creation of a recognized framework for operations, the domestic gaming industry can enhance entrepreneurs and opportunities for Bahamians. These opportunities are not only within the industry, but other industries that are indirectly connected to the industry, some of which I will discuss a bit later.
Risks of Current Operation
To maintain the status quo creates significant risks to the integrity of the country. Throughout our administration we have identified risks of money laundering, recognized where revisions to our laws and procedures were needed to maintain compliance with international best practices in anti money laundering administration, and to ensure the integrity of our important industries and reputation. We saw this when we advanced and passed legislation to include cash for gold and other precious metals into the anti money-laundering regime. This Government will maintain the integrity of the Bahamas and its industries, today is an example of that.
We have heard commentary, referenced in part by the Minister for Tourism, about the implications of money laundering risks with the industry. We have heard some reasoned discussion on the issue, and some completely alarmist discussion. We have heard discussion that would seem to attribute internal policy of a private banking institution to that of international regulation. As I mentioned, the positioning of gaming and casinos in the scope of anti-money laundering regulation is not something that the Bahamas is inventing, in fact, with operating casinos in the country we have had to ensure anti-money laundering review of such activities, we are now expanding the regulation and responsibility of compliance to all the recognized industry in the Bahamas. We do this through the following legislation we debate today as part of the compendium of Bills:
1) Financial Transactions Reporting (Amendment) Bill, 2014
2) Proceeds of Crime (Amendment) Bill, 2014
3) Financial Transactions Reporting (Gaming) Regulations, 2014
These Bills and Regulations cause for the domestic gaming industry to be brought into the scope of the anti-money laundering requirements of the Financial Action Task Force that is prescribed for in our laws, such as is the case for the financial services industry, and as mentioned, now, because of action by the Government the cash for gold industry. I want to take a little time to explain the internationally accepted standards that have been developed so the Bahamian people will be confortable that there are prescribed standards and that the Bahamas is capable of implementing them.
Financial Action Task Force Requirements
The Financial Action Task Force (FATF) is an inter-governmental body established in 1989 by the Ministers of its Member jurisdictions. The objectives of the FATF are to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF is therefore a “policy-making body” which works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.
The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction. They form the basis for a coordinated response to these threats to the integrity of the financial system and help ensure a level playing field. First issued in 1990, the FATF Recommendations were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and they are intended to be of universal application. The FATF Recommendations are the internationally endorsed global standards against money laundering and terrorist financing: they increase transparency and enable countries to successfully take action against illicit use of their financial system.
Through today’s Bills we will legislate and codify the requirements by the Financial Action Task Force. Specifically the requirements of the Financial Action Task Force, as they apply to casinos and gaming, are applicable under the provisions for designated non-financial businesses and professions. These are similar, and in instances identical to what is required when we passed the recent cash for gold amendment legislation.
The customer due diligence and record-keeping requirements set out in Recommendations 10, 11, 12, 15, and 17, apply to casinos when customers engage in financial transactions equal to or above the applicable designated threshold which is found in the Bill today.
The FATF Recommendations provide that casinos should be subject to a comprehensive regulatory and supervisory regime that ensures that they have effectively implemented the necessary AML/CFT measures. At a minimum:
• casinos should be licensed;
• competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding, or being the beneficial owner of, a significant or controlling interest, holding a management function in, or being an operator of, a casino; and
• competent authorities should ensure that casinos are effectively supervised for compliance with AML/CFT requirements.
The Gaming Bill and associated legislation accomplish these oversight requirements.
With respect to customer due diligence casinos should implement Recommendation 10, including identifying and verifying the identity of customers. Conducting customer identification at the entry to a casino could be, but is not necessarily, sufficient. Countries must require casinos to ensure that they are able to link customer due diligence information for a particular customer to the transactions that the customer conducts in the casino.
Recommendation 12 mandates that the requirements for customer due diligence, record- keeping, and paying attention to all complex, unusual large transactions apply to casinos.
It is important to note in the context of applying the Recommendations of the FATF to combat money-laundering makes it clear that references to Casinos throughout the FATF Standards include internet casinos.
It is also important to note and explain to the industry and the Bahamian public that not only is the Bahamas ensuring international best practices, we will have the proper implementation procedures, oversight and ability to comply.
Compliance Professionals
Some have questioned even with the international compliance and anti-money laundering framework, do we as Bahamians have the ability to enforce it. We heard these doubts from the Member for St. Annes. I proclaim that we have the best prepared compliance professionals in the world to put in place this regime. Bahamians would frequently hear me speak about the excellence we have in our compliance officers here in the Bahamian financial services industry, these are the professionals who will be the gatekeepers of this industry as well, preserving the integrity of the Bahamas and its reputation. In fact, I have already met with the Bahamas Association of Compliance Officers to structure training initiatives and certifications on compliance initiatives for gaming. We will have the expertise trained for the job ahead.
I mentioned earlier how formalizing and properly operationalizing the domestic gaming industry will create additional entrepreneurial opportunities for Bahamians. The management of the compliance obligations of the domestic gaming industry is just that. I recently spoke at a BACO event in Freeport where I explained in this new paradigm opportunities in compliance are growing. Our financial services industry is becoming more diversified, we now have caused cash for gold to be included in the AML obligations, and here today, and large, thriving industry of domestic gaming to be include, where Bahamians who have traditionally had only an option to work for an institution, can now be the owners of their own compliance professional organization.
The Bahamas has committed and regulates these and similar matters on a risk based approach, this is normal in the financial services industry, and I would like to take an opportunity to discusses what the implications are for a risk based approach so industry can have a better understanding on how the requirements will be imposed.
Bahamians – More Choices
Before concluding I would like to address an issue that has been a contentious issue amongst some in here, and some have regarded what is called a red line issue. The issue is the access for Bahamians to casinos. In fair disclosure, I am one who, like is frequently said by my colleague from Fox Hill, believes that we should advance more options and choices for Bahamians rather than less. I personally support Bahamians having access to casinos. I do, however, want to commend the Minister for Tourism, who, despite maybe having a differing immediate view than I do, has allowed for the Government to be able to have the option to make a reasoned and deliberate approach to the matter. The logic is that we will go through this process of regularization of the domestic gaming industry, assess the current state of affairs, and have an option to evaluate the evolution of gaming in the Bahamas, and gaming for Bahamians in the Bahamas. Yes, I agree with Bahamians being permitted to gamble in casinos, but I also accept the reasoned approach by the Government, the options that are available in the future on this matter, and determined that this approach is not a red line, terminal issue for me. I have faith in the Government I am a part of and its methodology in reasoned and deliberate reform.
We have also heard concerns that the Minister is the one empowered to decide on when Bahamians and under what circumstances Bahamians will be able to gamble in hotel casinos in the Bahamas. In fact, St. Annes said that he takes exception to the discretion under section 69, but it should be pointed out that the current Lotteries and Gaming Act gives the Minister of Gaming discretion under the following sections:
1. Under section 14, the Minister has the discretion to give an exemption to small lotteries.
2. Under section 16, the Minister is given discretion to allow charitable lotteries.
3. Under section 29, the Minister to allow lotteries for entertainment.
4. Under section 38, the Minister has a discretion to allow the transfer of a license.
5. Under section 45, the Minister has a discretion to grant a license and the decision is final.
6. Under section 47, the Minister has a discretion to amend a license, after consent of the Board.
7. Under section 51, the Minister has a discretion to ban a person from gaming.
8 Under section 55, the Minister has a discretion to make regulations.
There is no complaint that there is an excess of ministerial discretion in the current Lotteries and Gaming Act.
The reference to Minister means the Cabinet of the Bahamas. The Minister will usually require the consensus of the Cabinet to make such significant decisions. These decisions embedded in the Minster responsible for gaming does not in the context of Westminster governance permit subjective singular decisions, but decision on the consensus of the executive branch of Government, the Cabinet.
© Copyright 2014 by thebahamasweekly.com
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