Tue | Sep 26, 2017

CARICOM to engage US lobby group on correspondent banking crisis

Published:Wednesday | July 6, 2016 | 7:30 PM

Caribbean Community (CARICOM) leaders are to engage a United States lobby group and to also host a global conference in the Caribbean aimed at strengthening their advocacy for international banks to reconsider ending banking relationships with some financial institutions in the region.

Prime Minister of Antigua and Barbuda, Gaston Browne, who is leading CARICOM's response to the situation, told The Gleaner that the Community has to respond strongly to what he called an 'existential threat'.

The decision to have the global forum followed discussions last night by the leaders meeting in Guyana for the 37th CARICOM heads of government conference.

Browne told The Gleaner this morning that stakeholders such as regulators, correspondent bank representatives and non-government entities will be invited to the conference.

A final date for the global conference has not been determined, but it is expected that the event will be held by the end of this year.

Correspondent banking involves banks in much larger countries typically based in North America or Europe facilitating transactions for local banks which do not offer certain international services.

The big banks are ending the relationships as part of their efforts to conform to international regulations and to safeguard their reputations against allegations of facilitating financial crimes.

The fact that the Caribbean has been stigmatised as a tax haven does not help.

Yesterday, The Gleaner reported that Barbados' Central Bank is to undertake a study on the levels of compliance by banks in CARICOM with international guidelines to respond to the situation.

CARICOM representatives have held meetings with the US Treasury and the State Department for their intervention.

The regional body has said the actions of the big banks represent an economic assault that could leave the Caribbean isolated from the rest of the world.

It said critical services, including remittance transfers, international trade, and the facilitation of credit card settlements for local clients, among other services, will be affected.

Belize has been the hardest hit so far with many of its banks losing accounts with overseas entities.