Barbados and other Caribbean countries can count on the support of the International Monetary Fund (IMF) in the fight to protect correspondent banking relationships, the lending institution’s head has assured.
Managing Director Christine Lagarde said that some progress had been made, with “a major correspondent bank” offering at a closed-door meeting in Barbados last year, convened by the IMF, to provide technical support to respondent banks in the region.
Lagarde said this was in an effort to better understand the situation and to help the Caribbean banks upgrade their systems and improve their processes in order to satisfy the requirements by their former correspondent banks.
“A major bank, again I will not mention the name or the origin, that has left the region has now re-engaged with some banks,” Lagarde said at the opening of the IMF’s 2017 High Level Caribbean Forum at the Pegasus Hotel in Kingston, Jamaica on Thursday.
“Belize, one of the countries that was worst affected, is now recovering from a loss of over two-thirds of its correspondent relationships in 2015 and 2016, and currently Belize has at least two correspondent banking relationships, and can process transactions in a timely manner,” she added.
Pointing out that the IMF recently had another meeting on the issue with some experts and stakeholders, Lagarde said notwithstanding the efforts “the issue continues to be a challenge”.
“Let me assure you that we are not giving up on that. It is not only the issue of the status of the correspondent relationship, it is also the issue of the cost of those transactions that we will try to help with,” the IMF boss assured.
The issue of derisking became a major concern for Caribbean governments last year, as it threatened to disrupt remittance transfers, international trade, the facilitation of credit card settlements for local clients, among other services.
The international banks had said they were ending relationships as part of their effort to conform to international regulations and to safeguard their reputation against allegations of facilitating financial crimes.
Several top regional and international officials, including former Central Bank Governor Dr DeLisle Worrell and former Prime Minister Owen Arthur, have since been calling on the stakeholders to do what was necessary to address the issue, which they said could cause further damage to the local economy.