Bahamian internet firm set to tighten regulatory systems
The Tribune
Nassau, Bahamas
by Samantha Joseph
6 June 2001

A Bahamas-based Internet company yesterday said it was paying closer attention to the use of its services after US regulators identified on-line firms as an increasingly popular vehicle for exploitation by money launderers, who want to disguise their illegally-earned revenue as legitimate income.

James Turk, managing director of the Bahamas-registered firm, GoldMoney, told The Tribune his company was now implementing tighter governance procedures to prevent abuse by criminals. He added that the company's four-month old system will have more sophisticated technology by next year.

"I am quite confident our company is not being abused," Mr. Turk told The Tribune yesterday in a phone interview from his New Hampshire office. "We're obviously watching it and there's nothing [to show] that our system is used incorrectly."

GoldMoney is a payment system that allows clients to use gold bars, purchased from the London banks who sell the metal once they have confirmed client identities, to make payments via the Internet. The electronic currency is called a GoldGram, and Mr. Turk said the London banks have already confirmed that the buyers of the gold bars used to make these payments are all involved in making legitimate transactions. "So we [GoldMoney] actually have a good vetting system - the bank is doing it for us," he said.

The GoldMoney system is owned by Net Transactions, a company with its administrative office in the British Isles and its corporate headquarters in Nassau.

US regulators believe Internet companies, such as GoldMoney need increased regulation, fearing money launderers will increasingly switch the focus of their activities to cyberspace. However, Mr. Turk said his company was not a financial institution, in that it did not keep deposits or other assets, thus failing to meet the criteria that defines such companies.

"We're like the telephone company, really," he added. "All we do is allow people who already own the gold to communicate with each other."

But due to its affiliation with a Bahamas-based bank, regulators have told The Tribune that GoldMoney will come under the provisions of the Banks & Trust Companies Act, which has adequate provisions for such firms.