Region advised to raise regulatory standards
BARBADOS and other Caribbean countries must look to raise regulatory standards to beat back financial sector challenges coming from the international community.
Attorney-at-law Bruce Zagaris is sounding this warning in a discussion paper that was circulated at the recently held Barbados International Business Conference, held at the Grande Salle of the Tom Adams Financial Centre.
At that conference there were presentations which highlighted the twin problem of the international business sectors being subjected to some harsh actions by the developed countries and their organisations; and the withdrawal of correspondent banking services with indigenous banks in the Caribbean.
“Financial institutions and bankers’ associations in the Caribbean should try to help raise Anti Money Laundering (AML) and financial regulatory standards and communicate the same,” Zagaris said in the paper published by Offshore Investment, an international magazine.
He said that it will take initiatives by both the Caribbean governments, the financial regulatory agencies and the private sector to continue to raise standards, develop internal organisations and communicate their standards both internally and externally.
“Their professionals also need to professionalise and network with their counterparts worldwide, so that they understand and anticipate changes in financial regulatory regimes,” said the Washington D.C.-based attorney-at-law.
He made the point that there is evidence to show the problem of anti-money laundering and other increased financial regulatory standards’ impact on the Caribbean. Zagaris pointed to the phenomenon of re-risking and the imposition of increasingly tougher standards by international organisations such as the Financial Action Task Force (FATF), and regional laws especially from the USA, Canada and the UK.
He recalled that during a meeting between Caribbean heads of Government and US President, Barack Obama, the Prime Minister of Antigua and Barbuda had called attention to the unfair and unsubstantiated labelling of the Caribbean region as a high risk area for financial services, and the resulting loss of correspondent relationships.
He called also on the Conference to establish a committee of Finance Ministers of Finance to address this issue “because unless the matter is dealt with urgently, indigenous banks will be forced to close their doors”.
Zagaris said that a number of Caribbean jurisdictions have incurred reputational losses due to being placed on the non-cooperative list of the FATF, the Organisation for Economic Co-operation and Development and the Financial Stability Board.
The attorney-at-law added that in response to the Financial Stability Forum initiatives, the Caribbean has organised workshops to upgrade the financial regulatory mechanism for non bank financial institutions.