Little progress has been made by Caricom in resolving the issue of de-risking which is severely affecting banking activities across the region.
This was the conclusion by Caricom Heads of Government who reviewed latest developments with correspondent banking at their meeting in Georgetown, Guyana last week.
In a communique at the end of the meeting, the regional leaders said the current de-risking strategy is discriminatory and counterintuitive to good public policy and it is gravely affecting Caricom's trade, economic welfare and the transfer of remittances.
It was agreed that Caricom would continue "robust and unrelenting advocacy on the issue," with the Committee of Ministers of Finance on Correspondent Banking should maintain the current high level engagement.
In his first address to Caricom, recently elected St Lucia Prime Minister Allan Chastanet called for a "more effective lobby approach," building on the successful campaign the regional grouping had with the United Kingdom on the issue of Advance Passenger Duty (APD).
The issue was also mentioned by other leaders in their opening remarks and was high on the agenda of the meeting. Following discussions, the regional leaders agreed to hold a Global Stakeholder Conference on the Impact of the Withdrawal of Correspondent Banking on the region with participation from banks and regulators from the region, the United State, Canada and Europe, as well as international development partners and representatives from civil society.
No date or venue for the conference was given in the communique at the end of the region.The de-risking problem has its genesis in international regulations intended to address money laundering and financing of terrorism, known as AML/CFT.
All financial service providers, including the big banks and those working with low-income communities, are required to enhance their internal controls; undertake customer due diligence procedures on all new and existing clients; introduce higher levels of surveillance of suspicious transactions; keep transaction records; and report suspicious transactions to national authorities.
It also requires international banks and financial institutions to know that their correspondent bank are also undertaking the same level of due diligence.
This has had the unintended consequence of seeing increasing numbers of international banks withdrawing their correspondent banking facilities in the Caribbean either on the basis of the cost of compliance with the AML/CFT rules, or the perceived possibility that they may be placing themselves in jeopardy and may face huge fines.
On another key issue, Britain's exit (Brexit) from the European Union (EU), the Caricom leaders said in their communique that it was "a watershed event in current world affairs whose geopolitical and geo-economic repercussions would be far-reaching and long-lasting." They received a detailed brief on the political, diplomatic, trade, economic and financial implications of Brexit for the region, as well as recommendations for addressing them.
There was agreement for Caricom to continue to monitor developments as the exit process unfolds as the United Kingdom and the European Union remain strong and valued partners of the regional grouping.