Barbados is spending big bucks to comply with global anti-money laundering regulations, even though there is very little financial crime, says the head of the state financial services watchdog.
Chairman of the Financial Services Commission (FSC) Professor Avinash Persaud said that Barbados is spending a fortune on compliance, while at the same time having to send home hundreds of public servants as part of an on-going debt restructuring process.
Barbados is one of the few countries in the world that still has exchange controls, making it difficult for local business owners to move their money around – and thus impossible for money launderers, Professor Persaud said.
“So, who on earth, would come and launder money here? I mean if a money launderer was found caught in Barbados with exchange controls, you have to wonder whether the right place for them is prison or a mental asylum,” he said, while delivering remarks at today’s opening of a regional meeting on compliance at the Hilton Barbados Resort.
“One of the problems we are facing in the Caribbean is that the process being required of us is increasingly expensive, costing huge amounts of money.
“We are cutting our welfare budgets, we are laying off workers, and we are having to spend more money on compliance and regulation to hit the process even though there is very little money laundering in our region,” he continued.
Professor Persaud, who suggested that it would be pointless for money launderers to operate in small island states with exchange controls, also turned his attention to the fact that the region has lost more correspondent banking relationships than any other in the world.
While banks are doing a risk return calculation, the risk of being slapped with a large fine unrelated to the magnitude of money laundering, is large, while the profits they make from the region are small, the economist said.
“So they are not closing correspondent banking relationships because they think there is money laundering. But, because they say the risk return trade off doesn’t make any sense, that if they get a one billion dollar fine it would take decades of profits in order to afford that fine. It doesn’t make sense and they are withdrawing correspondent banking relationships with serious consequences for small islands who can only exist by international trade,” he added.
In an effort to tackle the consequences of regulatory compliance regulations, Professor Persaud called for a regional approach to forming a database showing the roots and paths of money laundering in the world.
“We need to have this information not done every ten years, but on a regular annual basis. Again, providing us with the ammunition to make our cases when we are being put on a list for not having a process to track something that doesn’t actually happen in our countries,” he said.
As the conference opened, Attorney General Dale Marshall told local compliance professionals that it was important for them to find a delicate balance between meeting all of the regulatory requirements, while making their businesses more attractive for new clients, staying competitive, and contributing to Barbados’ international reputation as a clean jurisdiction.
“Compliance professionals are vital to the continued health and viability of your organizations.… You and your organizations are ultimately part of the economic future of countries in the Caribbean.
“As a policy maker, I view you as partners in our efforts to build a robust and resilient business friendly Barbados, a Barbados that is free from corruption in any form, a Barbados that is competitive, a Barbados that is financially sound, and one that has a strong voice in the international community,” Marshall said.