As foreign banks, particularly those in the United States continue to sever ties with financial institutions in the
Bank of Guyana Governor, Dr Gobind Ganga
Caribbean over money laundering concerns, the Bank of America has ended its relationship with “indigenous banks” in Guyana.
Guyana Times understands that the Bank of America sent a notice indicating that it was severing its corresponding relationship with “indigenous banks” in Guyana. The notice was sent about a month ago.
However, Governor General of the Bank of Guyana, Dr Gobind Ganga, has assured that there was no need to panic about the situation, since Guyana’s economy would not be impacted in any way. He clarified too that contrary to reports, the Bank of America was the only corresponding bank that has cut ties with Guyana to date.
He explained that Guyana was currently in talks with several other banks that were willing to form new corresponding banking relationships with local financial institutions.
“We have had other foreign banks that have shown interest in providing the kind of corresponding banking relationship to fill the void that the Bank of America is causing… These are banks from Europe and North America,” Dr Ganga stated.
When asked how far along were the discussions with these banks, Dr Ganga told this newspaper that the talks were ongoing and projected that the negotiations should come to fruition shortly.
“So, at this time, there is no cause for concern, because the banks do have corresponding relationships and they are seeking others. The Bank of Guyana is assisting these banks in finding new corresponding banking relationships,” Dr Ganga reassured.
This matter was on the agenda for discussion at the 37th Caricom Heads of Government Meeting held in Guyana July 4 to 6, as Caribbean leaders try to tackle the cut-off of regional indigenous banks, referred to as de-risking – a situation that poses dire consequences for the Region, including crushing impacts on the wider economy.
De-risking is when international banks withdraw from their relationships with indigenous banks because of fears of money laundering and questionable sources of funds which would cause the international banks to receive heavy fines from their regulators.
Caribbean banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. However, since last year, the Region has been facing the impact of de-risking and the issue has been occupying the attention of regional policy-makers, following signals by international banks that they were unwilling to continue carrying the business of regional banks.
De-risking in the Caribbean came into the limelight last year when the Belize Bank was cut off by the Bank of America and one of the two banks in Montserrat shared the same fate. Some of the areas that are affected because of de-risking are: transfers of remittances, cheque payments, international trade and the facilitation of credit card settlements for local clients.
The Caribbean Development Bank (CDB) quoted a November World Bank survey saying that about 75 per cent of international banks have experienced a reduction in correspondent banking services with the Caribbean being the worst affected.
However, Prime Minister of St Lucia, Allen Chastanet, believes that a collective and broad effort is needed to address the situation. At the opening ceremony of the Caricom Heads of Government Conference on Monday, Prime Minister Chastanet said the Region must stop thinking that it has to solve this problem alone.
He pointed out that there were a number of multinational companies in the US such as airlines, cruise companies, and suppliers as well as individuals who own their homes – that have a vested interest in the Region and know exactly how to lobby their Government.
In this vein, the St Lucian Head of State posited that the Caribbean should get more persons from abroad, especially those who would be affected, involved in efforts to address the Region-wide problem that threaten their economies.
“The idea of us going to Washington, DC by ourselves is a tried and tested failure. We must be able to bring more people to the argument and we must do it urgently,” Chastanet remarked.
