De-Risking severely affecting CARICOM states- President Granger
The loss of corresponding banking relations was discussed at the recently concluded Thirty- seventh Regular Meeting of the Conference of the Heads of Government of the Caribbean Community, which was held here from July 4-6, 2016.
Guyana’s Head of State, David Granger speaking at the closing press conference of the CARICOM meeting said the loss of corresponding banking ties with North American banks or De-risking as it is commonly called is “severely affecting member states, it remains a very serious issue, but we must find a solution given its effect on our financial and trading systems in particular.”
But even as this is being discussed at the level of CARICOM, the Bank of Guyana (BoG) has received correspondence from the Bank of America(BoA) informing that it will be severing ties with local banks in August.
During an interview with News Room a few weeks ago, BoG Governor, Dr. Gobind Ganga said the implications for Guyana would not be dire since systems will be put in place. He was also quoted recently in the media as saying that Guyana is in talks with several other international banks that are willing to form corresponding relations with local banks.
While Guyana is not severely affected by these terminations, other countries in the region are facing difficulties, with Belize the hardest hit. In Jamaica, it is being reported that the number of money transfer businesses and foreign exchange traders has declined as a result of the severance of correspondent banking relationships since remittances are a major source of foreign exchange.
Business has slowed in the International Business and Financial Services sectors in the Cayman Islands, The Bahamas and Barbados.
De-risking is viewed as a mechanism by international financial institutions to protect their financial systems from possible threats posed by money laundering and terrorist financing, however, its effect on smaller territories has proven troublesome.