The 27th Intercessional Meetings for the Caribbean Community concluded on Wednesday in Placencia with a plan of action drafted on several issues, the main topic was correspondent banking. In the closing press conference, Prime Minister Dean Barrow spoke on what was decided.
On correspondent banking we agreed to the appointment of a high level advocacy group to be led by the Prime Minister of Antigua and Barbuda, the chair of the Finance Minister’s Committee we had earlier set up. This group will be charged with the responsibility to represent the interest of the region in addressing this issue including an approach to the UN and the WTO. We’re also talking about engaging directly with the regulators, particularly in the US and with congress certainly congressional leaders as the team will be able to interface with.
Love News had an in-depth interview with the head of the Caribbean Development Bank, Warren Smith who spoke on compliance by the Caribbean Community with the US regulations.
One of the difficulties that we looked at is trying to understand what is the real source of the problem because what we heard is that there is a general view that the regulatory bodies in the United States for example feel that the Caribbean is generally compliant. In other words we are doing the right things in relation to money laundering, anti-money laundering, we’re doing the right things when it comes to ensuring that terrorists financing isn’t supported through our financial institutions; so we’re doing the right things. If we are therefore doing the right things what is the reason why we find ourselves in a position where our correspondent banking relationships are at risk cause if we are doing the right things what else do we need to fix in order to address the problem.
During the press conference, Prime Minister Barrow mentioned the possibility of having insurance as a possible solution. While the PM did not go into details as to how that matter was assessed and deliberated on, Smith gave us a deeper insight into the possibility of insurance on correspondent banking.
One of the considerations and this is where the insurance argument arose is that it could well be that it’s just a matter of small size. We don’t do enough business to warrant taking the risk. The banks are prepared to go to countries; large countries which do large volumes of business so that even if they get fined occasionally they can absorb that cost but if they are operating in small jurisdictions where you have a relatively small volume of business then the economics of it doesn’t look so good. So in that situation, one of the considerations is, if you have a risk, one possibility for mitigating that risk is to transfer that risk. You can transfer it through insurance. In other words, the banks here would buy insurance against the risk of being fined and what it would mean is that there would be an incentive now for them to ensure that they have in place the best possible protection against them being used as channels for money laundering and the transfer of money for terrorist financing and so on so that is the concept behind this issue of insurance. Insurance is a great mechanism for transferring risk. As to whether you could find an insurance company, insurance mechanism that would be prepared to cover that risk or take that risk is a moot issue at this point.
The commission set up to address the correspondent banking issue will be lobbying to the World Trade Organization and Congressional leaders in the US. We asked Smith to what end that would be done and how beneficial that could be.
Well the lobbying issue is the logical one because the regulatory agencies are government agencies so that if we can influence the decision of the political directorate in the third countries that may be a way we can arrive at solutions that are in our interest. So what it means in effect is that we have to prepare our case very well, we have to be able to present the case to whether it is the Congressional Black Caucus or any other groups that might be sympathetic to the Caribbean or might have connections to the Caribbean; business or otherwise, that’s a strategy that needs to be pursued. What I think is necessary and I think the Prime Minster perhaps mentioned this point is that there has to be multipronged, multifaceted approach addressing this problem because we really are not absolutely certain what is the knob of the problem.
The 27th Intercessional meeting for the Heads of Government for CARICOM came to a close at around six o’clock Wednesday evening on the Placencia Peninsula with a few delegations leaving Belize to return home immediately after while others remained for a social event on the beachside, marking the end of the meetings.