ST JOHN'S, An­tigua–Fi­nance min­is­ters from the East­ern Caribbean have un­der­tak­en a com­mit­ment to tack­ling the "ex­is­ten­tial threat" of de-risk­ing. The dis­clo­sure came on the heels of the just-con­clud­ed East­ern Caribbean Cen­tral Bank's Mon­e­tary Coun­cil meet­ing here on Fri­day.

The fi­nance min­is­ters ex­pressed con­cern about the neg­a­tive im­pact that de-risk­ing would have on their re­spec­tive economies.

De-risk­ing refers to the process of fi­nan­cial in­sti­tu­tions clos­ing ac­counts of clients that are be­lieved to be high risk for mon­ey laun­der­ing or ter­ror­ist fi­nanc­ing. A June 2016 In­ter­na­tion­al Mon­e­tary Fund pub­li­ca­tion–"The With­draw­al of Cor­re­spon­dent Bank­ing Re­la­tion­ships: A Case for Pol­i­cy Ac­tion"–said at least 16 banks in the re­gion across five coun­tries have lost all or some of their cor­re­spon­dent bank­ing re­la­tion­ships (CBRs) as of May 2016.

Ac­cord­ing to the IMF, sev­er­al in­sti­tu­tions in Bar­ba­dos, The Ba­hamas, the East­ern Caribbean Cur­ren­cy Union, Guyana, Haiti, Ja­maica, and Trinidad and To­ba­go have had cor­re­spond­ing bank­ing re­la­tion­ships ter­mi­nat­ed. The doc­u­ment notes that many of these ju­ris­dic­tions have re­port­ed­ly been able to find re­place­ment CBRs or have been able to re­ly on their re­main­ing ones.

"The full ex­tent of the im­pact has yet to be quan­ti­fied, but the un­mea­sured ef­fect has been a loss in busi­ness con­fi­dence and in the ease of some ba­sic trans­ac­tions. The main CBR providers in the Caribbean are lo­cat­ed in the Unit­ed States, Cana­da, and to a less­er ex­tent Eu­rope and the Caribbean," the doc­u­ment stat­ed.

An­tigua & Bar­bu­da's Prime Min­is­ter Gas­ton Browne, who as­sumed chair­man­ship of the Coun­cil, spoke ex­ten­sive­ly on the sub­ject dur­ing the one-day meet­ing.He said while sev­er­al re­gion­al banks would have been de-linked from the in­ter­na­tion­al pay­ment sys­tem, he is not aware that any coun­try has been to­tal­ly de-linked.

"We're say­ing that we can­not sit on our lau­rels and al­low it go get that far," Browne said. "It is a se­ri­ous threat to the re­gion and we have to fight it and to make sure that there is no fur­ther such de-risk­ing."

The An­tiguan leader told re­porters that the EC­CB Gov­er­nor, Tim­o­thy An­toine, has writ­ten sev­er­al of the cor­re­spond­ing banks re­quest­ing a hold on any fur­ther de-risk­ing as the Mon­e­tary Coun­cil seeks to con­vene a stake­hold­er con­fer­ence lat­er this year. Af­ter call­ing it a "wor­ry­ing de­vel­op­ment" dur­ing the open­ing cer­e­mo­ny, he lat­er told re­porters that even though mem­ber states have not yet seen se­ri­ous ef­fects of de-risk­ing, the gov­ern­ments are keen on im­ple­ment­ing pre­ven­ta­tive mea­sures to elim­i­nate this "ex­is­ten­tial threat."

"It is re­al­ly an ex­is­ten­tial threat, but if it con­tin­ues un­abat­ed, then the im­pli­ca­tions are very clear," Browne said, adding that there could be im­pli­ca­tions for re­mit­tances and oth­er ar­eas. He not­ed that there are oth­er se­ri­ous hu­man con­se­quences in­clud­ing dif­fi­cul­ties pay­ing for ed­u­ca­tion, med­i­cines and health­care in gen­er­al and even in terms of im­port­ing food.

"In An­tigua and Bar­bu­da's case, 90 per cent of what we con­sume is ac­tu­al­ly im­port­ed and 80 per cent of that comes from the Unit­ed States. So if we're un­able to set­tle our bills in US cur­ren­cy, then it has im­pli­ca­tions even for im­ports. Again, what we're do­ing, we're fight­ing the is­sue be­fore it gets to that stage," he said at a press con­fer­ence.

Ac­cord­ing to a com­mu­niqu� is­sued up­on the con­clu­sion of the sub-re­gion­al meet­ing, the Coun­cil was up­dat­ed on re­cent of de-risk­ing by glob­al banks and not­ed that cor­re­spon­dent bank­ing re­la­tion­ships are crit­i­cal for en­abling key fi­nan­cial and eco­nom­ic trans­ac­tions like re­mit­tances, for­eign di­rect in­vest­ments and in­ter­na­tion­al trade in goods and ser­vices. Ac­cord­ing to the doc­u­ment, such ser­vices con­tribute sig­nif­i­cant­ly to the re­gion's growth and de­vel­op­ment.

"Coun­cil there­fore agreed that ur­gent and on­go­ing dis­cus­sions on cor­re­spon­dent bank­ing re­la­tions geared to­wards pro­mot­ing fi­nan­cial in­clu­sion, trade fa­cil­i­ta­tion in the glob­al mar­ket and mon­e­tary pol­i­cy in gen­er­al is re­quired," Browne said as he read from the com­mu­niqu�.

He told re­porters the fi­nance min­is­ters ap­proved the EC­CB's as­sump­tion of full re­spon­si­bil­i­ty for an­ti-mon­ey laun­der­ing and com­bat­ing the fi­nanc­ing of ter­ror­ism (AML/CFT) reg­u­la­tion of all in­sti­tu­tions un­der the Bank­ing Act.

They al­so agreed, where ap­plic­a­ble, to rec­om­mend to gov­ern­ments with­in the ju­ris­dic­tion that nec­es­sary reg­u­la­tions be is­sued to con­fer au­thor­i­ty on the EC­CB for AML/CFT reg­u­la­tion. Ear­li­er, dur­ing the open­ing cer­e­mo­ny, out­go­ing Chair­man, An­guil­lian Chief Min­is­ter Vic­tor Banks said –the Coun­cil, be­ing aware of de-risk­ing's po­ten­tial­ly neg­a­tive im­pact, agreed to a joint ap­proach in ad­dress­ing the mat­ter.

Such an ap­proach would in­clude ad­vo­ca­cy through po­lit­i­cal and diplo­mat­ic chan­nels, use of SWIFT reg­istry by in­dige­nous banks, con­sol­i­da­tion of the bank­ing sec­tor and, pos­si­bly, the es­tab­lish­ment of a Caribbean Bank in Unit­ed States.

CMC