CARICOM to continue robust advocacy against de-risking
GEORGETOWN - The Caribbean Community (CARICOM) is advancing its efforts to address de-risking and its effects on the region and heads of government have taken the decision to approach the government of the United States directly.
Prime minister of Jamaica, Andrew Holness, briefed the media on the subject on Wednesday afternoon, the final day of the two-day 37th regular meeting of the conference of heads of government of CARICOM held in Georgetown, Guyana.
Holness added that the meeting also agreed to increase the region’s voice in various international fora as well as to enlist the support of friendly countries.
At a subsequent press conference at the conclusions of the meeting, president of Guyana, David Granger, pointed to the latest developments with respect to the loss of corresponding banking arrangements that were severely affecting member states. It remained a very serious issue that the region had to find a solution to, given its effect on financial and trading systems in particular, he said.
A communiqué issued at the conclusion of the meeting pointed out that the heads of government emphasised that correspondent banking was an important global public good and that the current de-risking strategy was discriminatory and counter-intuitive to good public policy. They re-iterated that CARICOM’s trade, economic welfare and the transfer of remittances were gravely affected by the de-risking strategies of foreign banks.
Heads of government agreed that CARICOM would continue its robust and unrelenting advocacy on the issue and that the Committee of Ministers of Finance on Correspondent Banking should maintain the current high level engagement.
The heads also agreed to host a global stakeholder conference on the impact of the withdrawal of correspondent banking on the region, which would include banks and regulators from the region, the United States, Canada and Europe, international development partners and representatives from civil society.
De-risking is international banks’ withdrawal from their relationships with indigenous banks because of fears of money laundering and questionable sources of funds which would cause the international banks to receive heavy fines from their regulators. Regional banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. The issue has been occupying the attention of regional policymakers, following signals by international banks that they are unwilling to continue carrying the business of regional banks.
Transfers of remittances, cheque payments, international trade and the facilitation of credit card settlements for local clients are among the areas that have been affected by de-risking.
The Caribbean Development Bank (CDB) has quoted a November World Bank survey as saying that about 75 percent of international banks have experienced a reduction in correspondent banking services, with the Caribbean being the worst affected.
Reports are that eight financial institutions in Barbados, about seven in Jamaica and five in Belize have been affected by a termination of or restriction in correspondent banking relationship.