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CEO: Regulation may ‘drive away’ big gamblers

Consultant says Caribbean finds itself ‘squashed’ by regulatory demands from international bodies
  • Mickey Charles.

Guardian Business Editor

Published: Oct 29, 2013

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A international consultant has argued that the gaming industry in The Bahamas and the Caribbean must “unfortunately” deal with demands from major economies to implement enhanced sector-specific regulations which could reduce its attractiveness vis-a-vis U.S. competitors such as Las Vegas.

Alan Pedley, an international gambling regulation consultant with Australia-based Gaming Associates, stated his position in response to claims from a Canadian CEO, Mickey Charles, who argued that “know your customer” procedures in The Bahamas are already too onerous and will drive away “big players” in casino gambling if made more stringent.

Both men were delegates at the Caribbean Gaming Forum 2013, which is currently being hosted by the International Governance and Risk Institute at Atlantis resort.

Pedley said the reality is that the Financial Action Task Force’s (FATF) updated recommendations on reducing opportunities for money-laundering and other financial crimes will not be applied equally in the U.S. and other Organisation for Economic Co-operation and Development (OECD) jurisdictions, but the Caribbean must

nevertheless put in place a “risk management” system that will mitigate its concerns.

“The problem for the region is the FATF is not about to blacklist the U.S. because of what occurs in Las Vegas.  But I can tell you now that they don’t mind jumping on Caribbean nations, because the powerful G8 will jump all over and squash Caribbean nations.  They wouldn’t touch the U.K., they wouldn’t touch the U.S. or France, but this is a different environment and it’s just unfortunate.”

His comments came after forum delegate and speaker Charles, CEO of The Sports Network, a top provider of real-time sports information and a commentator on the gaming industry, argued that The Bahamas will “scare people away” from gambling in the jurisdiction if it puts in place overly onerous “know your customer” due diligence measures to counteract money laundering.

Referring to procedures already in place at Atlantis, Charles said the resort has already gone far beyond what is demanded of visitors to casino hotels in Las Vegas.

He accused The Bahamas of being “consumed by legislative constraints that are prohibitive and self-defeating” and said the “obsession with money laundering is ridiculous.”

“You check into this hotel and they ask you for things that no hotel in the world that I have been to asks you for.  Your home telephone number, your email address, why are you here - no one asks you that, but they ask you that here.

“I wouldn’t come back here if they paid me, and if I came back again I wouldn’t answer those questions.  If you want to ask those questions - if you want to find out from someone where they work, how much money they make - if you do that in a hotel in Vegas, you may as well close the casino.  Close it. It’s that simple.

“So what I am cautioning you about, is watch your legislation.  You want to grow and attract people.  If you do what you are talking about doing, don’t even think about the larger players coming here.  It will be a dream never to come true.”

Parliament is currently considering upgrades to The Bahamas’ legislative framework for gambling, with the aim of increasing the sector’s competitiveness against its U.S. counterparts, such as major hotels in Las Vegas.

Charles suggested that this competitiveness boost, which involves upgrading the law to allow for mobile and online gaming, among other changes, will be for nothing if more regulations are put in place that could inconvenience players.

“You can’t really go around trying to get more people to come here and then ask them the color of their underwear.  It’s none of your business.  If I deposit a check and I want to play, it’s none of your business where I got the money.  It’s really not.

“You’re going to legislate yourselves right out of building the big dream.  You really could.  Don’t have any dreams about getting even close to what Vegas or Foxwood, or Mohican Sun or any of them do, it’s not going to happen (with increased regulation),” said Charles.

Different environment

Pedley said he “couldn’t agree more” with Charles, but added that the Caribbean finds itself in a “different environment” than Las Vegas, in which it must comply with demands emanating from institutions such as the FATF that he suggested will not be complied with in the U.S.

“This is a different environment and it’s just unfortunate. And that’s where a risk management program becomes absolutely essential - to know the source of the funds, for example, the beneficial ownership; it doesn’t have to be in your face.

“If you have a high value customer you start to do a discreet background check to discover ‘is this person wealthy enough to explain this level of gambling, from legitimate sources’?  That is the type of controls that I think need to be in place in practice.”

Stephen Thompson, national coordinator for the National Anti-Money Laundering Taskforce, said that at the end of the day The Bahamas may make a decision to pass on implementing a number of the 40 recommendations made by FATF if it believes this is key to maintaining competitiveness in The Bahamas’ “number one industry”.

“We should not look at it and say ‘we must do all 40 of these things’.  We may look at it and say it is not practical for us to do this one and the other one, because tourism being our number one industry, why should we try to appease or comply with 40 recommendations from an international body, comply with that to the detriment of our number one industry?  That’s why I say what (Charles) said made good sense.”

However, Thompson said these considerations will have to be weighed against the possibility of sanctions from the FATF should The Bahamas be deemed “non compliant”.

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