Gaming revisions should give US banks comfort’
The latest revisions to Bermuda’s gaming laws should help to give comfort to US correspondent banks that they can deal with the proceeds of gaming from Bermuda casinos, according to Senator Michael Fahy.
The Minister of Tourism welcomed the passing of the Casino Gaming Amendment Act 2016 earlier this week, saying the Bill brought the island a step closer to establishing a regulatory framework for casinos.
The Act passed without any objections in the early hours of Tuesday morning, despite some vocal opposition from MPs from both sides in the House of Assembly.
“We are very pleased that the Casino Gaming Amendment Act passed without objection,” Mr Fahy said. “The Bill brings us ever closer to creating a regulatory framework that should give comfort to US correspondence banks that they can deal with the proceeds of gaming from Bermuda casinos.” His comments come just days after Alan Dunch, chairman of the Bermuda Casino Gaming Commission, revealed the island’s three banks had told Government they “won’t bank casinos”.
Last night HSBC and Bank of Butterfield said they would not comment on the issue, while no response from Clarien had been received by press time.
Mr Fahy told The Royal Gazette: “The Gaming Commission has been undertaking due diligence and the issue is that if the correspondent banks will deal with Bermuda gaming proceeds then that should remove the impediments.
“It is our view and that of the Commission that a strong regulatory regime will make all the difference.”
Mr Dunch told this paper he was “cautiously optimistic” that Butterfield and Clarien would be able to come to a business agreement with their correspondent banks in the US.
“It’s not a question of banks here not being prepared to bank casinos if they had the choice on their own,” he said.
“The issue is that the correspondent banks that they use in the United States as clearing houses will not allow them to clear the proceeds of gambling in Bermuda, as things currently stand.”
Mr Dunch added: “I first became aware of this banking issue in September 2015 when I was asked with [commission executive director] Richard [Schuetz] to attend a meeting of what is known as the Bermuda Banking Association.
“At that meeting, there were representatives of HSBC and Clarien. HSBC are their own clearing house. They made it clear that they would not get involved in gambling.
“Clarien and Butterfield [later] both explained to me, in extraordinarily cordial terms, that while they themselves might entertain banking casinos, they could not do so without the blessing of their correspondent banks.”
He said he and Mr Schuetz were advised to speak to the correspondent banks and have since met with the Bank of New York Mellon and Wells Fargo, Butterfield’s and Clarien’s correspondent banks, respectively,
Both banks explained that before they could consider banking casinos in Bermuda from a business perspective, they would have to be satisfied that the island’s regulatory package would meet the approval of their regulators.
“They said ‘go away, develop your regulatory package and bring it back to us’,” Mr Dunch said.
The revisions to the 2014 Casino Gaming Act were debated for nearly five hours on Monday evening, with some terms, including time restrictions on when Cabinet members and MPs could become involved in the gaming industry, coming under fire from some quarters.
Mr Fahy described the provisions as “quite normal”.
“The provisions relating to restricting members of Cabinet and also restricting members of the Legislature whose responsibilities relate directly to gaming from participating in gaming for two years after leaving office is not unprecedented in other jurisdictions, particularly those where our correspondent banks are domiciled,” he said.
A clause granting a provisional casino licence to Desarrollos Group, developers of the upcoming St Regis hotel for St George’s, also proved unpopular with the Progressive Labour Party.
But Mr Fahy maintained: “This has been done in the national interest. It is important to note that the developer will still be required to pay all relevant fees, satisfy conditions as laid out by the Gaming Commission and pass suitability tests per the Act, just like any other developer who may be granted a provisional licence by the Commission.
“The developer is doing everything asked of it and we are confident about their commitment to Bermuda and their intent to build a first-class resort which will bring jobs and hope to the people of St George’s and boost our tourism product.”
Mr Fahy added: “The chairman and the CEO and the entire Commission should be thanked for the work they are doing and I look forward to continue to work with them to see our casino gaming industry be a total success
“We shall be tabling extensive and numerous regulations to support the Bill in the near future including fees and other matters that require Gaming Commission regulation.”