PORT OF SPAIN, Trinidad, Nov 4, CMC – Caribbean countries have been urged to strengthen their Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) legislation as well as their administrative procedures as the region seeks to combat with the issue of correspondent banking and de-risking.
Antigua and Barbuda Prime Minister Gaston Browne, who was here earlier this week attending the one-day ne-day 2016 High Level Caribbean Forum that brought together Caribbean Community (CARICOM) prime ministers and finance ministers, told the Caribbean Media Corporation(CMC) that several recommendations had been made to deal with the banking issue at an international conference on the matter held in his country late last month.
Browne, who is leading the Caribbean Community (CARICOM) reaction to the correspondent banking problem, said the meeting also urged the regional countries to adopt the recommendations so as to “give some comfort to the correspondent banks so that they could understand that we have the necessary framework in place in order to manage risks”.
Correspondent banks, which are mainly large, international banks domiciled in the United States of America, Europe and Canada, provide Caribbean states with vital access to the international financial system, by offering services to smaller, domestic banks and financial institutions to complete international payments and settlements.
However, many banks, which provide correspondent banking services have been seeking to manage their risks by severing ties with institutions in the region.
The issue of corresponding banking was a major item at the annual summit of CARICOM leaders in Guyana in July and the meeting is here is as a result of such deliberations.
Browne told CMC that the meeting in St. John’s also discussed the contentious labelling of the Caribbean as a tax haven, saying “we have decided that we need to embark on a process of re-branding the region, as a stable region…rather than have the region seen as a tax haven.
”Some other very good ideas in terms of utilising technology to manage risks had been proffered at the meeting and adopted and even at the level of the banks at the micro level for them to undertake to have greater dialogue with the regulators and certainly the corresponding banks in the United States so that they could understand the framework that they have in place to manage risks…”
Browne agreed with a statement made late last month by the Governor of the Central Bank of Belize, Joy Grant, that the correspondent bank situation is not a matter that will be solved “any time soon” even as she had acknowledged that there were some “small steps” being taken by the international community to understand the problem facing developing countries.
“De-risking is here to stay especially for institutions and countries that do not comply or strengthen the AML/CFT regulations and the administration of those issues as well as ensuring that they adhere to all those transparency requirements.
“So it will be here for a long time, however it is important though that banks and certainly the region take steps to mitigate against the risks of de-risking,” he said, adding that “I believe that on the basis that we have a good solid framework to deal with the various risks as perceived by the correspondent banks that will help to mitigate against de-risking”.
Browne said many of the international financial organisations have adopted a position that “de-risking should be risked base and not base on ….the fancy of some individual law.
‘So even though it is here to say I think with a greater collaboration…and advocacy to have the legal and administrative framework in place that we can actually mitigate against risks,” he added.