The Bermuda Casino Gaming Commission will seek recommendations on finding alternatives to the island’s three local banks regarding handling casino transactions, Chairwoman Cheryl-Ann Mapp recently said. She stated, “The commission continues to have very positive and encouraging dialogue with the local banks, regarding the banking of casino funds. I am confident that the local banks will be able to work with the casinos. However, the commission is seeking the advice of our overseas counterparts as to any other options which might be available to a casino operator.” To date, the gaming commission has granted one provisional casino license, to the Hamilton Princess Hotel and Beach Club.
However, former Casino Gaming Commission Executive Director Richard Schuetz, said local banks most likely would not get permission to be involved from their correspondent banks in the U.S. “Any correspondent bank would do due diligence on Bermuda and I doubt that the newspaper and magazine articles over the last year would help the cause,” he said.
Schuetz left as executive director after Tourism Minister Jamahl Simmons announced he had the authority to fire gaming commissioners without cause and to compel them to follow his “general directions” on policy. Last November, Simmons said delivering a “full set of casino gaming regulations necessary to set the highest level of standards for the industry” was a priority, but he has not yet followed up.
The previous gaming commission chairman, Alan Dunch, who quit in protest over legislative amendments, stated in November 2016 a casino industry could not exist without buy-in from local banks. At the time Dunch said the local banks had told the government they “won’t bank the casinos” and correspondent banks for Butterfield and Clarien had indicated they would need to be satisfied the island had tough anti-money-laundering controls in place. The commission planned to introduce a stringent regulatory framework for the casino industry to attract U.S. banks. However, Parliament has yet to take up the draft regulations.
Premier and Minister of Finance David Burt stated recently, “The Ministry of Finance will soon commence consultations on expanding the types of banks that can operate in Bermuda.” A spokeswoman for HSBC Bermuda said, “Following a thorough review some years ago, the HSBC Group took the decision to limit its involvement with the gambling sector.” In 2012 HSBC paid a $1.9 billion settlement in the U.S. for helping Mexican drug cartels launder money and breaching international sanctions by doing business with Iran.
A spokesman for Clarien said, “Clarien continues to gain further understanding of the casino gaming legislation and regulation. Upon completion of this analysis, Clarien management will make a risk-based decision to progress further discussions with various stakeholders including our board and shareholders and, most importantly, our correspondent banks.”
Schuetz and Dunch met with Wells Fargo, a correspondent bank for Clarien, and Bank of New York Mellon, Butterfield’s correspondent bank, in 2015. Schuetz said, “Both stated to me they would feel most comfortable with a U.S. model of regulation because since the U.S. had been addressing anti-money laundering since the passage of the Bank Secrecy Act in 1971. The U.S. casino regulatory system had a strong culture of compliance and there was a great deal of institutional knowledge in the U.S. about addressing anti-money-laundering issues in casinos.”
But Schuetz noted, “While Minister Simmons seems to think he’s involved in best practices, I think the rest of the casino world and the banking system may disagree.”
As one observer of the situation noted, “If your own banks don’t trust you, why should any bank trust you?”
