By NAN Business Editor
News Americas, NEW YORK, NY, Fri. Sept. 16, 2022: U.S. Congresswoman Maxine Waters on Wednesday zoned in on the critical issue impacting the Caribbean region – beyond derisking.
In delivering an opening statement at the historic full committee hearing on the Impacts of De-Risking on the Caribbean, Waters (D-CA), Chairwoman of the House Committee on Financial Services, said: “For too long the lack of financial access faced by Caribbean nations and their majority Black populations has been blatantly ignored.”
Her comment came as the IDB, in a new report titled, ‘Finance for Firms: Options for Improving Access and Inclusion,’ found that the COVID-19 pandemic made it harder to access financing across the region, and smaller firms face more significant hurdles than larger ones when it comes to accessing finance. Additionally, women-owned and/or operated firms face even more severe challenges than other firms across the region.
“Between half and two-thirds of all women-owned and/or -operated firms across the six Caribbean countries reviewed report credit access (e.g., high collateral requirements) as a major or very severe obstacle to business operations,” the report added.
Derisking has of course added to that pain, with Waters noting that the harm on businesses and families across the Caribbean and the United States has been occurring for at least a decade.
“Financial access is key to a nation’s stability, but for our neighbor island nations, whose economies rely on cross-border transactions, they’re being denied this path to prosperity and resiliency,” the Congresswoman said. “We must acknowledge that our nation’s security and wellbeing is directly linked to that of the Caribbean nations and that dwindling financial access endangers these mutual benefits.”
In her presentation before the committee, Prime Minister of Barbados, Mia Mottley, said regional countries are committed to addressing any deficiencies in their anti-money laundering and countering the financing of terrorism (AML/CFT) policies. But said the US Treasury should “adhere more closely to the principle of risk sensitivity and not to participate in listings of countries where the lists pose a material risk to a country’s development and where there is no evidence that the country poses a material risk to the global financial system.”
“This will protect financial inclusion locally and internationally, guard the international network against underground alternatives, and toughen the fight against money laundering,” she said. “It will turn the big guns away from countries where little money laundering occurs to those where much does.”
Wendy Delmar, Chief Executive Officer of the Caribbean Association of Banks Inc., in her testimony called de-risking the “proverbial ‘thorn in the side’ for banks and other financial institutions in the Caribbean.”
“As a Caribbean national and career banker for over two decades, the onslaught of de-risking activity and its resultant adverse impact on the banking industry and economies of the region has been both disheartening and deeply concerning,” she added. “Given the fast paced rate at which compliance requirements are changed (often with little to no justification) banks and other financial institutions within the Caribbean are left to pursue a continually moving goal post. This ultimately results in burdensome and excessive expense to satisfy the new requirements which stifles business development and expansion.”
Wayne Shah, Senior Vice President, Wells Fargo & Company and Vice Chair, Financial and International Business Association, noted that Wells continues to do business in the Caribbean and as far as the Financial and International Business Association (FIBA)is concerned, “the era of de-risking of small Caribbean banks has long been over.”
But he said, “major challenges remain for financial inclusion for the Caribbean, including “… sustaining a view that the Caribbean is a region of safety and soundness for financial services and inclusion; encouraging independent country and counterparty risk analysi and calibrating regulatory mandates and addressing unintended consequences of legislation and regulations.”