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by pltm
(PLTM) - As the Caribbean continues to grapple with effects of foreign banks, particularly those of the United States, severing ties with regional financial institutions, the British Virgin Islands (BVI) is also faced with the de-risking phenomenon, Premier and Minister for Finance, Hon. Andrew Fahie has noted.
In response to the motion on de-risking presented by Grenada at the 67th Meeting of the Organisation of Eastern Caribbean States (OECS) Authority and the 4th sitting of the OECS Assembly in Antigua in June, the Premier said that this issue had placed excessive burdens on the region’s financial infrastructure.
De-risking is the limiting or termination of correspondent banking 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.
According to Premier Fahie, it impedes each country’s ability to effectively engage in global business and have sustainable economic growth.
Speaking for a local standpoint, the Minister for Finance noted that the banking situation critically impacts the BVI’s economic vulnerability and further impedes and threatens its ability for economic recovery from the devastating effects of the 2017 hurricanes.
He said the BVI continues to invest heavily in its infrastructure to thwart financial crime. As such, he feels this should provide the necessary assurance that banks require to stop de-risking from the region and to allow correspondent banking relationships to continue and to be established with banks within these jurisdictions.
“We therefore call on the international banking community to stop de-risking and to allow us to continue to play our vital role in the global economy, through the use of our business companies, which for 35 years have been a conduit to facilitate cross border trade, investment and business,” he told the meeting.
De-risking has not only led to restricted access, but in some instances, the complete loss of correspondent banking relationships. But the Premier stressed that correspondent banking relations are what he described as the axles that keep the wheels turning in the systems of global finance and trade.
“Connectivity in our highly interdependent world means that there must be conduits to facilitate trade. International business and finance centres, like the BVI, have evolved to be those conduits and meet the needs of global businesses and investors, and internationally mobile individuals,” he remarked.
Transparency
Although the Territory continues to suffer from an increasingly risk-averse global banking environment that has been categorized as high risk, resulting in discriminatory policies being levied on corporate service providers and their clients doing or trying to do business facilitated by the jurisdiction, Premier Fahie listed several areas in which the BVI has made efforts to comply with international regulation and standards.
He said the BVI has established one of the most robustly regulated systems to combat money laundering and counter terrorist financing in compliance with the recommendations set out by Financial Action Task Force (FATF).
“We also cooperate in a number of international initiatives established to increase tax transparency by the Organisation for Economic Cooperation and Development (OECD), the European Union (EU) and we have an extensive network with countries across the global for mutual legal assistance and tax information exchange,” he explained.
The BVI, he added, is ahead of most with these regulatory systems and international cooperation initiatives. Companies incorporated in the BVI must comply with rigorous customer due diligence and know-your-customer checks, and enhanced customer due diligence for persons identified as politically exposed persons (PEP).
The FATF, the OECD and the EU and other bodies have assessed and recognized the BVI as compliant with the global standards established for anti-money laundering, to counter terrorist financing and to stop tax evasion.
