Increased cost of living likely if Caribbean banks lose relations with US, Europe

Last Updated on Monday, 25 April 2016, 6:19 by Denis Chabrol

Trade Ministers of the 15-nation Caribbean Community (Caricom) have called on United States (US) and European commercial banks not to halt doing business with their counterparts in the region because it would hurt economies.

Antigua and Barbuda’s Trade Minister, Chet Greene told the ministerial meeting, which ended last Friday (April 22, 2016) in Guyana, that already evidence shows that Caribbean countries are finding the cost of correspondent banking relationships with Turkey and China “very high and, except in dire circumstances, extremely prohibitive.”

The trade ministers approved a declaration, stating that “the loss of correspondent banking relations is having a deleterious effect on trade and increasing the cost of living to our people” and “the deprivation of correspondent banking services can create financial exclusion of our region from the international trading system with disastrous effects on our economies.”

In a statement to the trade ministerial meeting, Greene expressed concern that the labelling of the Caribbean as a “tax haven” or “high-risk” for tax evasion, money laundering and the financing of terrorism, although the region has passed all international benchmarks against financial crimes and no such high profile crimes have been committed through financial institutions here. “They are closing despite the fact that we have done everything we should do to ensure that our jurisdictions are fully compliant with the highest international standards governing tax information exchange, anti-money laundering and counter terrorism financing,” he said.

European and American banks are ceasing correspondent banking relations with banks in the Caribbean as part of a “de-risking” exercise to avoid huge fines should a major financial crime be committed.

The Antigua and  Barbuda Trade Minister assured Western commercial banks that they have nothing to fear in doing business with their counterparts in Caricom countries because they are non-secret jurisdictions, have signed tax information exchange agreements with major nations and provide information automatically on request, compliant with the Financial Action Task Force and the Organisation of Economic Cooperation and Development (OECD) and are implementing the automatic exchange of information /OECD Common Reporting Standard  as well as complying with the US’ Foreign Account Tax Compliance Act (FATCA).

Caricom has already raised the issue with the World Trade Organisation (WTO) but with little success.