Commercial banks here are making it clear they will not risk their relationship with corresponding banks around the world to satisfy slot machine operators.
President of the Barbados Banking Association (BBA) Donna Wellington today defended the rights of the financial institutions to refuse large deposits from these operators.
“Each bank currently enjoys cordial relations with their respective correspondent banks and each bank will make decisions as to who they bank with and who they don’t. Banks are private corporations and they can choose their customer base and they do so based on the levels of risk that they are comfortable,” Wellington told Barbados TODAY Tuesday afternoon.
It was during the opening ceremony of a three-day anti-money laundering workshop here Monday that Attorney General Adriel Brathwaite disclosed that the banks were refusing to accept cash from the slot machine operators because the money was being deemed proceeds from gambling.
Insisting that the operators were running legitimate enterprises, Brathwaite complained that the international agencies that painted everyone with a wide money laundering brush were forcing Barbados “back to days where suitcases of cash” were being moved around “because people cannot bank legitimately”.
“A couple days ago a legitimate business sent me a note on WhatsApp with lots of cash on a table saying, ‘AG help me, we don’t know what to do with this; our bank account has been deactivated and we are paying our staff with cash’, and they can’t operate like that,” Brathwaite said.
However, Wellington explained that while banks operating in Barbados were not mandated by any international regulatory body to refuse deposits from these businesses, there was too much at stake.
The BBA president stressed that even though slot machine operators may indeed run legitimate businesses, there was no way of getting around the label of gambling enterprises.
“When there are elevated risk levels and challenges around money laundering, we have to be careful about these issue from a regulatory standpoint. We also have correspondent banking relationships to maintain to carry on our business because that is our gateway to the world so it is vital that we keep those relationship,” Wellington stressed.
The banking executive did not reveal the number of operators who had been designated as gambling enterprises and had been locked out of the banking system as a result.
It has become increasingly common for large banks and other financial institutions to restrict or terminate relationships with categories of customers they believe pose a high risk of money laundering, terrorist financing or other forms of crime, according to the Financial Action Task Force (FATF), the inter-governmental body which promotes 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.
This has become a severe problem in correspondent banking where global banks have been closing down relationships with many of their respondent banks, especially in emerging economies, partly for commercial reasons, but mainly because these smaller banks cannot always meet today’s higher financial crime standards, the FATF said.