MEASURES being enacted globally to confront money, financing terrorism and other nefarious activities are creating problems for Caribbean indigenous banks.
And furthermore, the loss of the relationship which Caribbean indigenous banks are losing with their correspondent banking partners is preventing them from fully servicing their customers and retarding economic development.
This from Ian De Souza, Managing director and CEO of Republic Bank (Barbados) Limited who is also calling for the regulators to revisit their policy since their regulations are working against them.
De Souza made the comments as he added his voice to the raging debate about Correspondent Banking and De-Risking in the Caribbean.
In a detailed assessment of the issues, De Souza said that bankers in the Caribbean are very conscious of the need to prevent money laundering, terrorism financing, and the proliferation of weapons of mass destruction due to the damage these activities around the world. He said the measures that are required to be compliant with international regulations are being put in place, not only for the purposes of compliant and to protect correspondent banking relationships, but also because of their sense of responsibility for the protection of the world financial system.
“However, the weight of the current regulatory regime is too heavy and it is negatively affecting the cost of operations, the service to customers and the overall financial performance of respondent banks,” De Souza said.
The top Banker stated that for the correspondent banks , the costs “and risks of reputational damage are also very onerous and they are therefore being forced to discontinue correspondent banking as a line of business.”
According to him, “The loss of correspondent banking is severely affecting the ability of respondent banks in sub-regions of the world to fully service their customers and it is retarding economic development.”
De Souza said that regulations are also driving financial transactions and money transfers into alternative channels that are unregulated and cannot be monitored.
“The regulations are therefore beginning to work against themselves and they are losing effectiveness,” he said.
As such the regulators need to re-think their approach, De Souza added. (JB)
