Governments again complain about US banks

Bert Wilkinson | 7/28/2016, 10:35 a.m.
This issue just would not go away. In the past week, finance ministers from across the nine-nation Eastern Caribbean sub-grouping ...
Cash, money, credit card Pixabay

This issue just would not go away. In the past week, finance ministers from across the nine-nation Eastern Caribbean sub-grouping faced up to the issue of de-risking, the situation of American commercial banks cutting ties with those in the region because of increased pressure from the Feds to scrutinize transactions.

Calling it an “existential threat,” the ministers bemoaned the belief that the issue will seriously undermine their economies, as nearly 20 banks in various countries have already been cut off by U.S. counterparts. The Bank of America has been particularly harsh.

“We’re saying that we cannot sit on our laurels and allow it go get that far,” said Antiguan Prime Minister Gaston Browne, current chairman of the Eastern Caribbean Central Bank’s Monetary Council, as the meeting ended on the weekend. “It is a serious threat to the region, and we have to fight it and to make sure that there is no further such de-risking.”

The council met just as the International Monetary Fund released a report suggesting that the impact of continued loss of correspondent banking relations would in fact be negative on the Caribbean.

“The full extent of the impact has yet to be quantified, but the unmeasured effect has been a loss in business confidence and in the ease of some basic transactions,” the IMF said. “The main providers in the Caribbean are located in the United States, Canada and, to a lesser extent, Europe and the Caribbean.”

The issue had dominated the annual regional leaders summit in Guyana earlier in July and remains an area of concern.

Pointing to his own country as an example, Browne said, “In Antigua’s case, 90 percent of what we consume is actually imported, and 80 percent of that comes from the U.S. So if we’re unable to settle our bills in U.S. currency, then it has implications even for imports. Again, what we’re doing, we’re fighting the issue before it gets to that stage.”

Regional leaders have decided to hold a global conference on the issue in the Caribbean by October, while at the same time formally writing banks asking them to hold off cutting ties for now and negotiating with other banks to take the place of the BOA and others.

Crown Agents Bank of the United Kingdom, for example, has already sent a scouting team to talk with officials, and there is every indication that formal agreements to process wire transfers, checks and other transactions will be handed to that agency.

And just to be safe, the council has said it will oversee compliance of member nations with international anti-money laundering and terrorism laws to ensure all are on the correct side of the law.