Barbadians risk losing their money to fraudulent online financial platforms unless they check the providers’ credentials, Finance Minister Ryan Straughn warned as he tabled legislation to regulate virtual asset services.
Straughn brought the Virtual Assets Service Providers Bill before the House of Assembly on Tuesday. It is intended to give consumers greater protection while providing regulators and law enforcement with the tools to tackle digital fraud, he said.
“As we continue to see the financial market evolve, it is clearly necessary that we bring legislation that will give greater certainty to the public,” Straughn told lawmakers.
The legislation would establish a legal framework to address digital fraud and allow Barbados to collaborate with law enforcement agencies regionally and internationally, he added.
The minister suggested the rapid growth of apps and digital financial products has left consumers increasingly exposed to investment opportunities without knowing whether the businesses behind them are legitimate.
He said: “These days with the proliferation of apps and devices, a lot of persons are exposed to products, virtual assets, and they do not necessarily take the time to do the digging to verify that what is being advertised to you actually constitutes something that is material and something that is robust and substantive.”
He identified this as one of the areas the bill was intended to address, saying it would require anyone seeking to provide virtual asset services to Barbadians to first obtain a licence from the Financial Services Commission (FSC).
“If there is anybody that wants to provide a virtual asset service to any Bajan, they must first come and get licensed with the Financial Services Commission, and go through the same regulatory process, like everybody else, to ensure that Barbadians are protected. We need to ensure Barbadians that there is a regulatory framework to protect them.”
That approach would bring virtual asset providers closer to the regulatory framework already governing banks, credit unions, insurance companies, pension funds and mutual funds, the finance minister said.
But Straughn cautioned that regulation would not remove the need for consumers to exercise caution, urging them to check with the FSC at fsc.gov.bb before signing up.
“I urge Barbadians, before you click on something saying that is going to be a forex trading platform or is a crypto this or a crypto that, please check with the Financial Services Commission to see whether the person even made an attempt to register and to provide these services to you. Because once that money is gone, it gone.”
Straughn warned that more scams are being pushed through advertisements and in-app promotions, often with promises of high returns: “You’re playing a little game, and suddenly something pops up and tells you, ‘Oh, this fancy trading platform, and I can offer you if you put in $100, you can get $500 by Friday.’”
The government is working with regulators on technical measures to block fraudulent platforms, the finance minister said, but he warned that the changing nature of online scams means consumers must remain vigilant.
Straughn issued this caution over the use of digital payment systems: “If people are going to be offering services to you, there is a process usually, for you to be able to get back money financially, whether from a bank, a credit union, or insurance company, but when you click and transfer money, either by, I don’t want calling them specific names, but you know you can go downtown, you can transfer money in and out, or you can receive money in and out, you can do all types of things these days.
“[Central Bank of Barbados] just launched BimPay to make it easier for people to pay and transact business, but the ease with which you can transact business does not in any way substitute for the responsibility to check that when it comes to these financial transactions, that these people are legitimate people offering legitimate services to you.”
Straughn also urged people who have been scammed to report the matter rather than remain silent out of embarrassment, noting that reports could give authorities an opportunity to investigate and work with agencies in other jurisdictions in an effort to recover funds.
The minister added that stronger oversight was also necessary to protect Barbados’ financial system from being exploited by criminals: “All of this is to ensure that we protect the financial integrity of Barbados, so that criminals cannot use our system to be able to transact business and circumvent the legal requirements.”
With virtual asset activity increasingly crossing borders, Barbados must work with its CARICOM partners to tackle the risks collectively, he suggested.
(JB)
