By NAN Business Editor
News Americas, WASHINGTON, D.C., Fri. Nov. 4, 2016: A top level International Monetary Fund (IMF) official agrees that de-risking or the withdrawal of correspondent banking relationships presents a clear and imminent challenge to the economies of Caribbean nations.
Tao Zhang, the IMF’s Deputy Managing Director, speaking to regional prime ministers, ministers and central bank governors at the recent 2016 High Level Caribbean Forum in Trinidad, said the withdrawal of much needed global financial services poses a challenge for banks and companies in the many small economies that need to participate in the global payments system.
“It is hurting some of the most vulnerable members of society who depend on remittances from relatives overseas,” Zhang said. “In Belize, for instance, the problem has reached systemic proportions with bank assets equivalent to almost half of GDP being affected.”
The withdrawal is partly in response to intensified international efforts aimed at eliminating money laundering and terrorist financing —also known as Anti-Money Laundering (AML) and Combating The Financing Of Terrorism (CFT).
Several banks across the region have lost all or some of their correspondent banking relationships and international banks have stopped providing some services and have dropped clients that they consider to be “high risk.”
Zhang said one key reason for this trend is that some of the affected countries have gaps in their regulatory and supervisory frameworks. But he said he believes a durable solution to this issue requires dialogue between countries, regulators and banks and increased information exchange.
“This can help clarify regulatory expectations, build trust, facilitate capacity building, and share best practices,” Zhang said.
