Barbados is to lead a study examining whether Caribbean banks are compliant with international financial guidelines, as part of a Caribbean Community (CARICOM) strategy to counter moves by international banks to end their correspondent relations with the region.
The proposal for the study was submitted by Governor of the Central Bank of Barbados Dr Delisle Worrell at the 37th CARICOM summit held in Guyana.
CARICOM leaders have warned that regional economies are at risk of being shut out from the rest of the world if corresponding banking relationships (CBRs) which enable the provision of domestic and cross-border payments are terminated.
Critical services, including remittance transfers, international trade, and the facilitation of credit card settlements for local clients, among other services, would be affected.
The banks say they 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.
Worrell said the study would cover “the role of the small international financial centres in increasing the efficiency of global commerce; the status of the Caribbean regulatory, legal and risk frameworks and processes visa via international standards and best practices”.
He added that it will assess the level of compliance by using data monitored by a number of international agencies and institutions, including the International Monetary Fund, World Bank, Basel Committee on Banking Supervision, the Financial Action Task Force on Anti-money Laundering and the Global Forum on the Tax Exchange of Information.
Prime Minister Freundel Stuart has already indicated that the issue is of grave concern, warning that it could severely affect this island’s international business sector.
“The economy of Barbados has also over the years relied very heavily on remittances from our very large diaspora in various capitals of the world -Canada, the United States and the United Kingdom. So this is just not another issue for Barbados it is fundamental to our way forward and therefore we fully identify with our colleagues in CARICOM who are similarly threatened,” Stuart said.
In a statement CARICOM said that at least eight financial institutions in Barbados, seven in Jamaica, five in Belize and others in Antigua and Barbuda, Montserrat and other member states had already been affected by a termination of, or restriction in, correspondent banking relationship.
In addition to the study, CARICOM member states have also agreed to host a global forum by the end of this year with key stakeholders such as regulators, correspondent bank representatives and non-government entities to present their case.
CARICOM leaders have also outlined plans to engage a United States lobby group to advance their cause.
Regional representatives have already held meetings with the US Treasury and the State Department to seek their support.