The likely implications on the local banking sector of personal sanctions imposed upon politically exposed persons (PEP)

The United States Government announced recently that it has begun imposing sanctions on Guyanese politicians who are engaging in anti-democratic behaviour stemming from the political impasse following the elections’ results of March 2, 2020.
These sanctions include revocation of visas, thus restricting travel to the United States, and can also lead eventually to the freezing of assets (if any) owned by those persons in that country.
In this regard, a senior dignitary recently posited in sections of the local media that each such individuals (depending on the various stages of sanctions applied) can be regarded as an economic “non-person”. This, in turn, would have serious implications for the local banking sector within the framework of anti-money laundering legislation, which could affect correspondent banking relations with local banks.
This is a deeply troubling development for the local banking sector, and by extension the economy. The consequences of these sanctions on a small and fragile state like Guyana ought not to be taken for granted. These politically exposed persons (PEPs) who have recently been subjected to sanctions have now automatically exposed the local banking sector to the extent where the local banks can be severed from international correspondent banks if these persons attempt to conduct transactions through the local banking system within and/or connected to the United States.
This is premised on the Anti-Money Laundering and Countering the Financing of Terrorism Act 2009, wherein a PEP is defined as “any individual who is or has been entrusted with prominent public functions on behalf of a State, including a Head of State or of Government; senior politicians; senior Government, judicial or military officials; senior executives of state-owned corporations; important political party officials, including family members or close associates of the PEP, whether that person is resident in Guyana or not”.
These persons are categorised within the framework of this specific legislation as high-risk persons, and so banks and other financial institutions, in keeping with Anti-Money Laundering regulations, are legally bound to categorise these persons as high-risk.
The local banking sector would have to be extremely cautious with the accounts of high-risk PEPs, because if the local banking sector is severed from international correspondent banking, this would have the identical effect as if economic sanctions have been imposed.
Why? The reason is simple. The global trading currency and the reserve currency of Guyana is the US dollar, and a cut-off of correspondent banking relations would translate to the local currency becoming worthless, and international trade would virtually cease because the country would not be able to receive payments in US dollars; that is, payment received for exports and payment for imports, and of course foreign direct investments. In other words, Guyana would experience a crisis similar to what obtains in Venezuela, and this in turn would cripple the economy. The savings of depositors, which include those of householders and firms in the local banks, would become worthless, and hence these potential consequences need to be taken seriously.
While proponents may argue that these are not economic sanctions, Guyana is such a small and fragile state that, with a weak domestic currency, weak international reserves, and climbing sovereign debt, a complete cut-off from the international financial system would hurt the economy and every Guyanese of all walks of life.
Put differently, Guyana does not even need to be sanctioned economically before the economy collapses, because the exposure of the financial sector to the risks outlined herein would have an impact equal to that of economic sanctions, which is gruesome.
It is imperative that, henceforth, commercial banks exercise great caution in the handling of such accounts, in order to avoid the manifestation of these inherent and potential risks with which the local financial system is now fraught in light of these unfortunate developments.