The issue of de-risking by global banks, manifested most prominently by the restriction or withdrawal of correspondent banking relationships with mainly indigenous banks in the Region, was discussed at the Caribbean Community (CARICOM) Twenty-Eighth Inter-sessional Meeting of the Heads of Government of CARICOM which took place in Georgetown, Guyana February 16-17 last week.
CARICOM countries have been engaging in high-level advocacy to raise awareness of the implications of global banks’ de-risking, including the restriction and termination of correspondent banking services to mainly indigenous Caribbean banks. In the Communique released after the Inter-Sessional Meeting, it was noted that Heads of Government recognised the need for a continued regional approach and concerted action on this issue which has the potential to undermine the region’s financial systems and to cut off access to trade, investment and other financial flows, with both economic and poverty-reduction implications.
Heads of Government also recognised the need for continued urgent action to strengthen the integrity of the financial system in CARICOM Member States and to address the perception of the Caribbean as a high-risk Region. They also commended the Prime Minister of Antigua and Barbuda, and the Committee of Ministers of Finance for spearheading the advocacy initiatives towards resolution of the issue.
Below are the main take-aways from the Communique in regards to Heads of Government’s current and further action on the de-risking issue:
- Heads of Government considered the Strategy and Action Plan submitted by the Committee of Central Bank Governors, and requested the Committee of Ministers of Finance with responsibility for Correspondent Financing to assume the oversight of its roll-out.
- The Heads of Government agreed that the Region must continue its robust and unrelenting advocacy on the issue of Correspondent Banking, noting the advocacy initiatives’ success in raising international awareness of the consequences of de-risking.
- Heads of Government encouraged Member States to seize the opportunity of heightened awareness among International Development Partners (IDPs) to secure the resources and support required to strengthen the domestic and regional financial system.
- Heads of Government welcomed the efforts of the Caribbean Development Bank (CDB) to assist Member States to strengthen their financial systems and partnering with multilateral financial institutions to determine solutions to the ongoing de-risking threat to the Community.
- Heads of Government acknowledged the multi-dimensional nature of the several drivers behind the de-risking strategies being pursued by global banks, and called for a comprehensive stock-taking exercise to determine Member States’ status and ensure that national action plans are aligned with the timetable for compliance with global regulatory standards.
- Heads of Government noted the need to strengthen Member States’ compliance with the global regulatory standards with regard to Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) and Tax Transparency Information Exchange.
More on the 28th Inter-sessional Meeting may be viewed here.
The full communique is available here.
Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.