St. Kitts and Nevis (WINN); OECS member countries are set to benefit from funding recently approved by the Caribbean Development Bank (CDB) to assist the Caribbean in preventing the loss of ndent banking relationships.
Caribbean leaders consider the loss of CBRs as one of the leading threats to the region’s financial system. Recently international banks have cut ties with Caribbean banks in an effort to reduce exposure to risks associated with money-laundering and financing of terrorism.
The de-risking of regional banks has already affected several economies in the region, including Belize.
According to Daniel Best, Director of Projects at the Caribbean Development Bank, “CBRs are fundamental to the efficient operation and resilience of the global financial system. This project will contribute to a more stable financial system in the Caribbean, which will in turn allow more banks to access CBRs, so that they can continue to carry out international transactions. This is critical if the Caribbean is to reduce poverty and spur economic development.”
The CDB project will see US $250,000 going towards the implementation of a CBR-related pilot initiative which has three components:
1. Strengthening the implementation of, and compliance with, international financial integrity standards by governments in the Region, including updating laws and regulations as required.
2. Increasing the technical capacity of banks and credit unions in the Caribbean to conduct customer due diligence, and adopt anti-money laundering best practices. This will include training for staff at financial institutions.
3. Improving public-private sector coordination with regulators to more effectively address de-risking and develop a mechanism for ongoing dialogue between this group and external regulators and foreign banks.
The project will be implemented over three years in partnership with the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank Group. MIF will also manage the project. Components two and three will be executed by the Office of the Secretary of the Association of Supervisors of Banks of the Americas.
Governor of the Eastern Caribbean Central Bank, Timothy Antoine, said at a recent ECCU Monetary Council media briefing that the region continues to advocate to US authorities regarding the correspondent banking dilemma.He said it is not in the mutual interest of either US or Caribbean for US banks to severe their relationships with banks in the region.