This is the outcome of a regional study that is looking at the economic impact of de-risking on the economies of the Caribbean.
According to Belizian national Dr. Ydahlia Metzgen, an economist, who is leading the study, the just completed a visit to St John’s where they conducted a series of interactions with representatives from local , off-shore banks and foreign-owned banks, credit unions, money transfer operations, financial regulators, private sector Non-Governmental Organisations (NGO’s) among others.
Belize and St Kitts-Nevis are also being used as part of the case study for the project.
Metzgen said a study among the banking sector and the non-banking financial services sector in all three territories revealed that many have been adversely affected by de-risking.
“The survey results based on these entities which responded by completing the questionnaire, showed that 64 percent of the banking sector had been adversely affected while the figure for the non-banking sector stood at 51 percent,” she revealed.
The economist said the Caribbean needs to have a healthy banking sector in order for it to achieve its wider goals of providing a higher standard of living for its people.
For Antigua and Barbuda, she said from the information gleaned so far, it appears that the country is ahead of most with respect to its banks which have been taking the necessary steps not only to upgrade their systems, but also to appoint compliance officers.
She said the role of these officers is to ensure that the banks are compliant with the latest advisories coming from local legislators as well as from the external banks and watchdog agencies.
In the case of Belize, that was hit early and hard by the de-risking problem, she said the banks have been able to cope by putting in place updated AML/CTF framework and to move to automated software systems that automatically trigger suspicious activities.
Additionally, the banks have also been in constant contact with corresponding banks as regulators conduct a higher frequency of audits and then get the information out to the wider world that it has in fact been strengthening relevant legislations. “Basically, this means dispensing the myths about the region,” she declared.
Concerning measures that can be adopted to mitigate against these challenges Metzgen said there are two broad recommendations.
She said Caribbean countries have to make it clear that actions have been taken in their jurisdictions for increased transparency as well as putting in place Anti-Money Laundering/Counter-terrorism financing legislative frameworks.
“There seems to be a dis-connect between what information is available in the developed world about the region and the reality of what really exists; it’s both a communication and a perception problem,” she noted. She explained that the region is fighting a perception of the area that is about a decade old.
She also noted the need for a coordinated effort led by an entity such as UN ECLAC to advocate for the region at a higher level to give an understanding of the
De-risking refers to the action by international banks to sever corresponding banking relations with banks in the Caribbean.
This action by major global banks is being taken mainly out of fear that business relationships will expose them to higher risks due to concerns over the Caribbean banks’ perceived vulnerability to money laundering and financing of terrorism activities.
- Countries: Antigua_Barbuda