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Thursday, July 24, 2025

Former PM warns of threat to Caribbean banks

by

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KINGSTON–Caribbean stake­hold­ers, in­clud­ing for­mer Prime Min­is­ter of Bar­ba­dos Owen Arthur, say there is a need for uni­fied Caribbean ef­forts to com­bat the grow­ing move by large, main­ly US-based in­ter­na­tion­al banks, to sev­er re­la­tion­ships with small­er Caribbean-based fi­nan­cial in­sti­tu­tions, in­clud­ing mon­ey ser­vices busi­ness­es.

The calls were made dur­ing a Round­table Dis­cus­sion on Cor­re­spon­dent Bank­ing in Kingston, Ja­maica, or­gan­ised by the think tank, the Caribbean Pol­i­cy and Re­search In­sti­tute (CaPRI) in part­ner­ship with the Ja­maica Na­tion­al Build­ing So­ci­ety (JNBS), amid con­cerns about the im­pli­ca­tions for trade-de­pen­dent Caribbean economies and so­ci­eties.

Ad­dress­ing par­tic­i­pants at the fo­rum, Arthur ac­knowl­edged that while Caribbean coun­tries are not the on­ly ones be­ing af­fect­ed by the move by large banks to "de-risk" their op­er­a­tions, they must form strate­gic al­liances and add their voice to the cause as well as com­mit the re­sources nec­es­sary to strength­en their po­si­tion to re­sist any un­fair ap­pli­ca­tion of glob­al reg­u­la­tions and stan­dards.

Ac­cord­ing to the for­mer Bar­ba­dos Prime Min­is­ter, the prac­tice of de-risk­ing, which in­volves clo­sure of ac­counts of cat­e­gories of fi­nan­cial in­sti­tu­tions deemed high-risk for mon­ey laun­der­ing and ter­ror­ism fi­nanc­ing, di­min­ish­es the Caribbean's ac­cess to glob­al fi­nan­cial mar­kets and im­pacts the flow of near­ly US$10 bil­lion in re­mit­tances to the re­gion, an­nu­al­ly.

"The whole­sale cut­ting loose of clients, with­out eval­u­at­ing their risks, was not in­tend­ed to be a sub­stan­tive part of the fight to com­bat glob­al fi­nan­cial crime and ter­ror­ism," Arthur ar­gued, "But, this is pre­cise­ly the di­rec­tion in which the de-risk­ing ex­er­cise is tak­ing the glob­al fi­nan­cial com­mu­ni­ty."

He says al­though the Caribbean can­not shirk glob­al ef­forts to re­duce fi­nan­cial crime, fight ter­ror­ism and strength­en fi­nan­cial sys­tems, it must ad­vo­cate for fair ap­pli­ca­tion of the rules.

"The Caribbean can­not pro­fess to wish to stand askance from this glob­al ini­tia­tive," he de­clared.

"What it can and must do is to add its voice to those who are in­sist­ing that where rules and stan­dards are set which are in­tend­ed to be ap­plied fair­ly and uni­form­ly, this should be ob­served in prac­tice."

Arthur called for Caribbean coun­tries to en­sure their stan­dards and com­pli­ance mech­a­nisms meet glob­al re­quire­ments which, he stressed, could be achieved through im­ple­men­ta­tion of the sec­ond phase of the Caribbean Sin­gle Mar­ket and Econ­o­my (CSME).

"The plan to move to a sin­gle econ­o­my called for the putting in place, for ex­am­ple, of a Re­gion­al Fi­nan­cial Ser­vices Agree­ment and a Re­gion­al In­vest­ment Code, which, if brought in­to ex­is­tence, would have been de­signed to gov­ern and bring or­der to the op­er­a­tion of the re­gion­al fi­nan­cial sec­tor, and set out clear guide­lines con­cern­ing that sec­tor's re­la­tion­ship with the glob­al econ­o­my," he said.


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