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Report recommends expanded anti-money laundering protocols

The United States has again urged The Bahamas to expand anti-money laundering protocols in light of an expected growth in the gaming sector this year and the “possible” legalization of web shops.

The recommendations are contained in the U.S. State Department’s 2014 International Narcotics Control Strategy Report.

The report noted that illegal gambling – along with drug and gun trafficking and human smuggling – accounts for “major sources of laundered proceeds”.

“The government of the Commonwealth of The Bahamas should provide adequate resources to its law enforcement, judicial and prosecutorial bodies in order to enforce existing legislation and to safeguard the financial system from possible abuses,” said the report.

“Gaming will expand in 2014, due to the growth of casino gaming and possibly from the legalization of ‘web shop’ gaming. With this expansion, the government should ensure proper safeguards are in place, and provide additional suspicious transaction report (STR) training.”

The report noted that a referendum held in January 2013 that would have legalized web shop gaming failed.

Although Prime Minister Perry Christie promised to abide by the results of the vote and shut web shops down, the status quo remains.

Christie recently said that the government will have to deal with the sector, but said no formal decision has been made to regulate it.

The report also urged the government’s Financial Intelligence Unit to continue its outreach, training and coordination with financial investigators from the Royal Bahamas Police Force.

It also recommended that the government further enhance its anti-money laundering regime by criminalizing bulk cash and human smuggling; implementing a national strategy on the prevention of money laundering; passing proposed legislation to criminalize the participation in organized criminal groups; establishing a currency transaction reporting system and implementing a system to collect and analyze information on the cross-border transportation of currency.

The report also called on the government to ensure that there is a public registry of the beneficial owners of all entities licensed in its offshore financial center.

The report added that there is a significant black market for smuggled cigarettes and guns.

Money laundering trends include the purchase of real estate, large vehicles, boats and jewelry, according to the report.

Money is also laundered through legitimate businesses and international business companies (IBC) registered in the offshore financial sector, the report said.

In January, Central Bank Governor Wendy Craigg spoke of the dangers of an unregulated web shop sector.

“As a central bank, we are certainly aware that last year the domestic banks took explicit measures in compliance with these AML (anti-money laundering) regulations to have accounts that were operated by these number houses closed,” Craigg told Guardian Business at the time.

“That definitely came to our attention, and so they were left with a dilemma as to what to do with these large cash balances.

“We know that some of them were directed to the central bank to acquire government paper, government registered stock, treasury bills, but since we are also bound to comply with national KYC (know your customer) requirements, we had to deny those requests.”

Craigg said unregulated businesses involved in “cash intensive activities” could be vulnerable to criminal exploitation and have been “recognized by the international organizations as requiring oversight under national AML”.

The report also noted that the government has formed a National Anti-Money Laundering Task Force which aims to implement and comply with international standards to prevent and control money laundering and combat terrorist financing.


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