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PM Chastanet concerned about de-risking dilemma

By SNO Staff

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Allen Chastanet

Allen Chastanet

The severing of correspondent banking relationships is having a severe impact on the Caribbean region, and Prime Minister Allen Chastanet is recommending that a new approach is taken to address this issue.

Chastanet said correspondent banking wasn’t targeted towards the Caribbean but was aimed at eliminating money laundering and imposing huge penalties.

However,he said no consideration was taken as to how that would have affected the Caribbean.

“The region, economically, is so small that the banks have said that the risk of continuing to do business in the Caribbean makes it impossible for them to do so,” he stated.

But the impact is far reaching, as many Caribbean businesses and individuals are cut off from access to finance and it is difficult for new businesses to establish operations.

Chastanet noted that the issue was discussed in detail at the recent CARICOM Heads of Government meeting held in Guyana, between prime ministers, many of whom are their countries’ finance ministers.

He said the regional leaders have agreed to work more closely to address this issue in a holistic manner, protesting the issue and requesting an audience with the United States on the matter.

De-risking is international banks’ withdrawal from their relationships with home-grown 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 policy-makers, 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) 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 and others in Antigua and Barbuda, Montserrat and other member states have been affected by a termination of or restriction in correspondent banking relationship.

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  1. This has been and continues to be a matter of regional concern because it could cripple the economies of the Caribbean States. Our perspective should not be dismissive of meetings by the Heads as just another "talk-shop" resulting in "nutting happenin"

  2. DD

    Please don't get ahead of ourselves that is just what new governments do they talk a lot. Meetings here meetings there commenting on issues affecting us in the Caribbean because they are similar. Dr Anthony did the same. All caribbean newly elected governments do the same. We await results which will take a while..if they do come

  3. Its not just the caribbean. Africa and even US towns which are in relatively close proximity to the mexican border are experiencing this ''unbanking''.

    I have seen a few papers mentioning this as as far as I know caricom has even brought it to the attention of the USA.
    I am doubtful that the roblem will go away. With more stringent FATF recommendations and a rise in terrorism and fraud, the big banks are simply not willing to shoulder the massive fines which will be levied against them if they are found to be dealing with criminals (e.g. jack warner and republic bank Trinidad).

    The way forward would be to ensure that we satisfy ALL the FATF recommendations, keep a close eye on the offshore banking sector and keep open channels with banks which will more than likely NOT lose correspondent banking relationships (scotia, rbc and other reputable international banks) due to thier parent banks.

  4. Why is there a feeling of differentness about everything that Chastanet does?

    • You are so right. The prime Minister the Honorable Mr. Allen Chastanet is doing what he preached during his campaign. He will do things differently to get results. Change has come and he is doing exactly what Kenny failed to do


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