CDB official: Due diligence needed
FOR lawyers practising in the offshore banking and international business sectors, it is imperative to comply with anti-money laundering (AML) laws and carry out thorough due diligence on all clients, even those introduced through intermediaries such as banks, other law firms and accountants.
Deputy General Counsel at the Caribbean Development Bank (CDB), S. Nicole Liverpool Jordan, explained that this will go a long way in assisting correspondent banks in knowing the origin of the funds that they are processing.
“Given the current operating environment, offshore legal practitioners should also manage their clients’ expectations regarding the ease of doing business in their respective jurisdictions with the delays in opening bank accounts and in completing financial transactions.”
She was at the time delivering the 16th Annual Caribbean Commercial Law Workshop: Hemispheric Change & Caribbean Commercial Law on the topic, “Considerations for Legal Practitioners on De-Risking in the Caribbean”.
According to her, corporate lawyers would also have similar advice for their clients regarding ease of doing business.
“In addition, when negotiating contracts with their clients’ suppliers, lawyers should ensure that there is adequate time built in for payment after presentation of an invoice and, be attentive to any ‘time is of the essence’ clauses in the contracts.
“For attorneys working in the legislative drafting units in solicitor or attorney general’s chambers, they will no doubt be called upon to draft robust updated AML laws and regulations designed to prevent terrorists, drug traffickers, tax evaders, and other criminals from misusing the financial system to commit their crimes. Ideally, those laws should be harmonised with other jurisdictions in the Caribbean, as that would lead to more efficient regulation of the banking industry,” she pointed out.
The CDB official also stressed that while there needs to be an effective partnership between the banking sector, the regulators and law enforcement, as a precursor draftspersons should concentrate on laws to bolster investigatory powers of law enforcement and intelligence agencies, so that banks can renew their focus on commercial rather than regulatory activities.
“We see from the Mexican and Cayman examples that bank secrecy and data privacy laws may also have to be revisited by Caribbean governments to create a legal mechanism by which respondent banks could share information about their customers and their transactions,” she highlighted.
“In the interim, attorneys should be giving advice to respondent banks and to their customers on the extent to which customers’ data can be legally shared pursuant to any local freedom of information and data protection legislation. This advice would also extend to future situations where respondent banks in the Region introduce bio-metrics to identify their customers.
“In-house counsel of respondent banks also have to consider negotiating new CBRs (correspondent banking relationships) with, in some cases, smaller correspondent banks as well as CBRs in new currencies. There are, of course, also opportunities for lawyers who wish to move in-house to get specialist training and join the growing compliance departments of respondent banks,” Liverpool Jordan said.