The Central Bank governor said there is a “minimum standard” for financial institutions to issue bank accounts for non-profit organizations.
Raquel Thurston, program manager for Abaco Strong, told Tribune Business that she was “tired of chasing” her non-profit organization receiving commercial banks in their attempt to open a bank account. “There needs to be more regulation in place for nonprofits,” she said.
“It was certainly a challenge to open the account, but keep in mind that Abaco is starting to run again and most of the banks here on the island are relatively new. But the biggest challenge is that each bank has their own guidelines and set of documents they need and it has been like a wild goose chase to get all the documents they require.
“There is no set standard and I think the Central Bank needs to step in and make a decision on what the guidelines are and what the standard should be.”
Central Bank Governor John Rolle told Tribune Business that each bank can set its own guidelines. He added, however, that the Central Bank sets ‘minimum requirements’ but it is still up to the individual bank to perform ‘due diligence’ on the nonprofit organization’s board members. lucrative.
Mr Rolle also said: “The minimum standard for financial institutions is that they must understand what the entity is doing. They also need to understand individuals because, in all relationships, banks have a duty to understand the people behind them, beyond the simple legal entity.
“So I know that banks will often undertake investigations to understand who the sponsors or executives involved in an organization may be, such as what would happen if someone opened a relationship for a business as opposed to a sole proprietorship.”
These items “are usually not hard for people to satisfy,” he added. In addition, in the case of non-profit organizations, commercial banks require proof of registration as a non-profit association, and non-profit associations must first be registered with the Registrar’s Department. general and obtain a “certificate of registration” in order to comply with the Not-for-Profit Organizations Act 2019.
Ms Thurston admitted that when she first approached RBC in Abaco last year her nonprofit was not registered, but now she is registered and trying again with RBC and also now with FirstCaribbean. FirstCaribbean asks them for a business license in addition to National Insurance Board cards and passport as proof of identity for all board members, which Ms Thurston says: ‘Most of the people in our organization are expats and they don’t have no Bahamian ID card. , so there is no way they would fulfill this requirement.
A representative of FirstCaribbean spoke to Tribune Business and said that this case is about the Central Bank and that FirstCaribbean does not make the rules. A representative from RBC responded to questions on the same topic and said their stance on nonprofits remained the same and that they “support nonprofits in general.”
In addition to being a registered Bahamian nonprofit, Abaco Strong is also a US 501c3, under which it operated in the Bahamas before becoming fully registered in January.
Ms Thurston also said: ‘I’ve been a banker for 16 years so I kind of understand that the people in the bank do their best to follow the regulations because there are regulations in place and I know that one of the banks we Said we had to be registered in the Bahamas. It took a while, but I think it took a while because the government was changing, but once it was taken over, it happened pretty quickly. So we have the recording.
“So we have all the paperwork to be registered in the United States, so basically we have everything they would have asked for.
“So after registering as a business we went back to our bank to say that was what we had and RBC and Commonwealth Bank were so overwhelmed with customers they couldn’t give us an appointment. -you.”
Banks also could not provide her with an adequate list of what was required of her in advance so that she could prepare her for an actual date and instead she continued to “we spin” after months of waiting and anticipation.
She said: ‘It’s banking and it’s also regulatory. This is how I feel and it is not clearly regulated by the Central Bank. It seems that each bank makes its own decisions and has its own standards. »
For example, Ms. Thurston started dealing with FirstCaribbean and they asked them for a business license along with proof of registration. “We got the business license and after being heckled by RBC we went to FirstCaribbean and tried to work with them but now they are asking for passports and NIB cards but most of our members are owners of second homes, so they don’t have Bahamian identification. The registered company has a NIB number, but this is insufficient as the bank wants every member of the board to have one, and the NGO (non-governmental organization) itself must apply for one as if applying for one account. So that’s a lot of paperwork that we’re working on for that,” she said.
Working without a bank account for Abaco Strong is problematic to say the least, as they have to transfer money to members in order to pay contractors from a petty cash, which they have to continually update while a bank account keep an accurate record. what the organization does on a weekly basis.
The Nonprofits Act 2019 has come under scrutiny for being too strict in its approach and essentially preventing nonprofits from obtaining bank accounts. However, the law is clear that non-profit organizations must be registered to open a bank account. In this case with Abaco Strong was recorded from January.
Martha Fleury, president of Abaco Strong, added, “We’re just trying to sue a few banks to see where we can have success, the quicker we can provide information, they then ask us for more information. So we’re just trying to comply in the hope that one of them will pass.
Abaco Strong was founded after Hurricane Dorian in 2019 by several “community leaders,” and they worked to rebuild Abaco and provide humanitarian assistance to island residents if they needed help. food. “We are also in the process of building a community aquaponic garden. So we’ve all worked in many different communities and Abaco has really tried to facilitate long-term reconstruction,” Ms. Fleury added.