The issue of American commercial banks refusing to process checks and other financial transactions from a string of Caribbean countries has surfaced again but this time it is attracting the attention of US congressional representatives.
In the past five years or so, regional banks have been complaining that American financial institutions with which they have been relating to for decades, have terminated or have severely scaled down these relationships, citing the region’s alleged inability to properly avoid financing international terrorism and money laundering among other ills.
Banks in Guyana, Suriname, Belize, the Eastern Caribbean and others have been among the hardest hit in the past five years, forcing them to scramble to find alternative ways of servicing customers.
This week, several Caribbean leaders including those from Bermuda, Guyana, Suriname, Barbados, Trinidad and others caucused on the issue in Barbados at a forum attended by members of the Congressional financial services committee team led by Chairperson Maxine Waters.
All agreed that American banks have not only acted precipitately and impulsively but also have unfairly moved to terminate relations with the region based on fears that federal authorities would punish them. The banks have also said that transactions from the Caribbean are not persistently large enough for them to spend money putting additional systems in place to detect laundering and potential terrorism financing.
Waters said she understood the issue completely and will work to address it. Leaders like Keith Rowley of Trinidad and conference co-chair Mia Mottley of Barbados railed against the system and urged American banks to reverse course.
“Some of those banks that we’ve had long relationships with for decades, by now either have or are on the verge of saying that the Caribbean is not the place to continue doing business because of the risk climate that exists now. What the banks are concerned about are the risks that could come from doing business with us. That is a position we find unacceptable because we believe there is great progress to be made from doing business with us,” Rowley said.
For her part, PM Mottley said the forum has its value in the fact that the issue could now trigger congressional hearings.
“The most important decision that we made today is that the US Congressional delegation has agreed that this issue is of such major import that it really now merits congressional hearings to allow us to bring, not only those who are here in Barbados today, but to expose this issue to a wider audience, and also to bring those other banks who may well be benefiting from our business, but who are not willing to share in the burden that may be necessary in meeting additional regulatory issues as it relates to giving us the opportunity to be beneficiaries of correspondent banking relationships,” he said.
Several years ago, The Belizean central bank was forced to play the role of an international correspondent bank by cashing checks and processing financial transactions that would normally have been done by the likes of JP Morgan Chase, Citibank and Bank of America among others.