Article by Marlon Madden
Source : Barbados Today
Prime Minister Mia Mottley on Wednesday threw down the gauntlet to the United States Congress to better regulate banking relations and deal with the vexing issue of de-risking and blacklisting to prevent Caribbean nations from becoming financial outcasts.
She further cautioned that if urgent action was not taken, alternative ways to trade and transfer funds would be sought.
“What we face is a situation that . . . the avoidance of terrorism financing, the avoidance of money laundering, on which we are all agreed, is likely to happen because you are driving people underground,” the Barbadian leader warned in historic testimony before the US House Committee on Financial Services during a hearing on When Banks Leave: The Impacts of De-risking on the Caribbean, and Strategies for Ensuring Financial Access.
“We are here because we are fighting for the global public good and we are fighting for the human rights of our citizens.
“Our economies cannot function on their own. We do not make enough clothes, we do not produce our own food, we do not produce our own equipment and, therefore, unless we are able to trade with the rest of the world we are at risk of becoming financial pariahs,” insisted Mottley who was the first Prime Minister in near four decades to testify before the American Congress.
She identified blacklisting by the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force (FATF), the European Union, and other organisations as a major reason for correspondent banks withdrawing their vital services from the region over the years.
“We believe if we can move these lists, we are in a position to be able to at least have a better chance to make the case that the substantive concern that we all have to fight crime are being met,” the Prime Minister told the House Committee on Financial Services.
Mottley noted that over the last decade, almost all Caribbean Community (CARICOM) nations had lost more than 30 per cent of their correspondent banking relationships.
She contended that after “making noise” about the situation for close to a decade, it was time for action, as she noted that the large immigrant community in the US was also feeling the effects of being cut off from correspondent banking.
Prime Minister Mottley said in addition to individuals finding alternative ways to send money to their loved ones back home, businesses and countries would have to do the same when they want to trade.
She called for the changes and improvements to countries’ financial legislation and policies to be taken in real time, for greater use of technology, communication, sharing of information, “and, above all else, fairness and transparency to ensure that our people are not further punished”.
Asking the US to take action that will create a “level playing field” for Caribbean nations in the financial services space, Mottley urged Congress to “focus on where the money is rather than creating rules that act as a proxy to money laundering or terrorism financing”.
“This is the most nonsensical thing we have seen in public policy,” she said, stating that the FATF and other watchdog organisations were too focused on process and form instead of “substantive prosecution of money laundering”.
Mottley also echoed sentiments shared recently by regional economist Marla Dukharan, when she questioned why Barbados and other predominantly Black developing nations were often placed on a blacklist for their purported lack of compliance in the financial sector, while Luxembourg, the US, the United Kingdom, and other larger countries with predominantly White populations were not.
“Do not let this be recorded as an active and conscious bias. Look at the list of countries who are listed and you see that they are almost all former colonies and people of colour. And look at the countries who, in spite of being able to open a bank account within hours in Delaware, Wyoming, Luxembourg or Zurich, they remain off of these lists that speak about the risk of money laundering. Look and see where the divide comes,” said the Prime Minister who was accompanied by Special Envoy Advisors Professor Avinash Persaud and Economic Advisor Dr Kevin Greenidge, Central Bank Governor Cleviston Haynes, and Director of Finance and Economic Affairs Ian Carrington.
Congress representative for North Carolina Patrick McHenry also cautioned that as Caribbean countries are cut off from correspondent banks in the US, they could turn to China, which the US had been trying to discourage.
“When innocent people and legitimate businesses are being shut off from financial services we need to take a step back. We should re-examine our approach to make sure that we are not lumping the good with the bad,” he said.
Indicating that derisking could have severe economic consequences, Congressman McHenry added: “The question of the day is this, ‘where do those de-banked customers go?’ China.”
(marlonmadden@barbadostoday.bb)