In the wake of last month’s United States report in which Barbados and other Caribbean territories were blacklisted as major money laundering centres, a top regional official today called for tighter controls to be placed on cash transactions across the region.
Addressing the annual Domestic Financial Institution Conference at the Lloyd Erskine Sandiford Centre, Governor of the Eastern Caribbean Central Bank Timothy Antoine suggested that the region on the whole needed to reduce its dependence on cash transactions by as much as 50 per cent over the next five years.
“Cash is not just unsafe, it is expensive, just ask central banks and commercial banks,” he said, while acknowledging that the changeover to an electronic based system was likely to be met by resistance, given the risks associated with cyber security.
However, speaking on the theme Imperatives for Financial Sector Development in the Caribbean, Antoine stressed the need for the Caribbean to modernize its systems, raise its game and improve its competitiveness.
He also zeroed in on the challenges affecting the financial system in the Caribbean, warning that it was now a “key channel” for crimes, including counterfeiting, money laundering and corruption.
The Eastern Caribbean’s top economist further cautioned that weaknesses in one island “often impacts the reputation of all”, given that some international players neither knew nor cared about country specifics.
His comments followed closely on the heels of last month’s release by the US State Department of the International Narcotics Control Strategy Report on Money Laundering and Financial Crimes Volume II, in which it listed over 80 countries and territories – excluding the US – in which there were said to be serious councerns about money laundering.
Apart from Barbados, other Caribbean countries on the list include Antigua and Barbuda, the Bahamas, Dominica, Haiti, Guyana, Jamaica, St Kitts and Nevis, St Lucia, Trinidad and Tobago and St Vincent and the Grenadines.
In Barbados’ case, the report pointed out that the island’s criminal law limited Government’s ability to seize assets acquired through criminal activity, without first obtaining a conviction.
It also suggested the island’s Financial Intelligence Unit (FIU), law enforcement, supervisory agencies, and prosecutorial authorities were not adequately staffed and lacked the necessary capacity to perform their duties.
The March 2017 report also pointed to a weakness in terms of information sharing among regulatory and enforcement agencies, and stated that the country’s susceptibility to money laundering was “primarily associated with the domestic sale of illegal narcotics and the laundering of foreign criminal proceeds”.
While not making any direct reference to the report, Antoine suggested that strengthening of the region’s monetary policies was definitely in order, but cautioned that strong policy leadership and incentives by government in partnership with the private sector would be required.
He also pointed out that Belgium was one of the most cashless countries in the world, but said based on unofficial statistics as much as 70 per cent of payments in the region were currently paper based.
“The benefits of increased use of electronic payments go well beyond the financial sector and offer prospects for higher levels of economic growth, competitiveness and employment,” he said.
“And all of us know in this region that our growth rates are unsatisfactory – too low for too long – and we have to raise the trajectory. One of the things we can do, regardless of what goes on in the external world, is to actually reduce our use of cash and use more electronic payments,” he stressed.
In addition to reducing its use of cash, Antoine called on the region to mount a vigorous campaign to “help take the profit out of crime”, while describing the rising levels of crime across the region as concerning.