#BTEditorial – Derisking us into poverty

The eyes of the world are fixated on the conflict taking place in Ukraine. And for good reason. It is a bloody, heart-breaking circumstance facing millions of people in a country that did not seek to engage in a battle with its Russian neighbour.

We do not seek in any way to diminish the suffering on these people. For though we are situated at different corners of the earth we share some striking similarities in our national colours and symbols and our desire to exist in a democracy.

We pray for a resolution that saves the innocent from further harm, but we have a duty to also address issues that impinge on the survival of our citizens.

This includes our ability to transact business with the rest of the world through the global banking system.

For while on the one hand the International Monetary Fund (IMF) touts of the double-digit economic growth prospects for Barbados, we in the region face economically debilitating setbacks because of the dwindling number of financial institutions in the industrialised world willing to engage in correspondent banking with us.

Without such facilities, it becomes extremely difficult to trade and do business. Correspondent banking is the lifeblood of the financial services sector. Without it, businesses and citizens of a country are left with few legitimate means of transacting in today’s highly connected and regulated financial landscape.

And so, we were heartened by the presence on the island of a six-member United States Congressional Delegation led by Congresswoman Maxine Waters.

Waters, the Democratic representative for  California, is chairwoman of the US House Committee on Financial Services. A fierce politician who is known to stand her ground on principle when the cause deserves such.  The delegation came to “explore opportunities to expand access to financial services and banking in the Caribbean”.

Importantly, the Congressional  team not only met with Prime Minister Mottley but with leaders and senior governmental officials from across the region.

The list of representatives read like a who’s who from CARICOM with the Caribbean Community chairman  Prime Minister of Belize,  John Briceño. Dominica, Trinidad and Tobago, St Lucia, Suriname, Grenada, St Vincent and the Grenadines, Guyana, Cayman Islands, Anguilla, British Virgin Islands and Bermuda were either represented by the highest political level or very high-ranking officials.

Also at the discussions were the president and chief executive officer of Republic Bank Group Nigel Baptiste, along with the head of MoneyGram, the Caribbean Association of Banks, and senior representatives of Wells Fargo, which has 70 million customers in 35 countries.

What was clearly evident from the confab in Barbados was the seriousness with which Caribbean governments view the correspondent banking issue and the heavy-handed regulation of the region’s financial services sector from Bermuda to Belize and everyone in between.

The media briefing provided us with a glimpse into what was being outlined in the closed-door talks. Moreover, the anxiety and tension this matter is causing our leaders was overflowing at the head table.

Viewers may have been shocked to discover that Bermuda, a financial services powerhouse and a British dependency, was confronting the same challenges that Barbados was on the issue of correspondent banking, and the regulatory hounding by institutions such as the Organisation of Economic Cooperation and Development (OECD).

Premier of Bermuda David Burt was blunt. He pointed directly to the hoops and ropes citizens must jump through and over to do simple things like open a bank account because of the anti-money laundering and counter financing of terrorism (AML/CFT) financial requirements.

In other words, banks in the region are derisking and dumping customers so that they are not derisked by their correspondent banking partners in North America and in Europe.

It is a sickening cycle.

The problem is that these banks find the AML/CFT too onerous and expensive and are prepared to dump Caribbean banking institutions rather than to face the hassle.

All this is occurring while the European Union is blacklisting countries in the region, further compounding the already hostile financial services environment.

We in Barbados have a lot to lose in this fight. Our global business sector, which proved an important backstop when the bottom fell out of the economy during the COVID-19 pandemic, could face a most uncertain future if this matter is not addressed urgently.

We are pleased with the promise from Congresswoman Waters that it could form the basis of a Congressional Hearing. We look forward to such action, though the polarising environment in Washington does not inspire confidence.

As Mottley articulated during the briefing, this matter is “too critical” to our survival and “we cannot have financial pariahs or financial exclusion”.