In the past year or so, several of the larger commercial banks in the United States such as JP Morgan Chase and the Bank of America cut ties with counterpart institutions in the Caribbean, blaming increased pressure from federal regulators and higher costs to monitor the legitimacy of transactions from the region as reasons. It was easier to simply sever ties as they have done.
Stung by the moves and forced to seek out alternative international banks to process bank transfers, checks and other transactions, banks in the region hurriedly concluded new arrangements with others to keep customers happy. In one instance, the Belize’s Central Bank was forced to play the role of an international bank, processing checks and other transactions just to keep commerce moving as several of their banks were left in the lurch.
Now, bankers are moving to prevent the situation from deteriorating further, at least in their opinion. Some in Barbados, for example, are leading the way by upping the pressure on depositors from various sectors, gambling especially, to defend, explain and prove that daily large deposits are not from the proceeds of crime or illicit business.
This week, the Bankers Association through President Donna Wellington made it clear that these agencies prefer to err on the side of caution rather than accept large deposits from gaming houses and attract increased and unwanted scrutiny from local and international monitoring agencies including the international Financial Action Task Force (FATF).
So they have told gaming houses not to bring money each day to deposit as there are no plans to risk irking those international banks which still have corresponding relationships with the region.
“When there are elevated risk levels and challenges around money laundering, we have to be careful about these issues from a regulatory standpoint. We also have correspondent banking relationships to maintain to carry on our business because that is our gateway to the world so it is vital that we keep those relationship,” said Bankers Association President Donna Wellington.
Many of those bank whose relations were severed by the mega American agencies in the past year say that new correspondents such as British Crown Agents Bank now charge even higher processing fees than those offered by BOA in the past, calling it a clear case of exploitation but a necessary evil as relations have to be maintained.
But Barbadian Attorney General Adriel Brathwaite told Barbados Today that banks should be more reasonable as gaming houses are legitimate.
“A couple days ago a legitimate business sent me a note on WhatsApp with lots of cash on a table saying, ‘AG help me, we don’t know what to do with this. Our bank account has been deactivated and we are paying our staff with cash’, and they can’t operate like that,” Brathwaite said.
Barbadian banks are also now even questioning transactions from real estate agencies. More than 300 transactions were cancelled in recent months because of a “lack of clarity” about their legitimacy and processes involved.
All this comes as the Caribbean grouping of nations is upset with the United States and other western nations for their continued labelling of most of the bloc members as money laundering destinations and this is part of the reasons why banks are becoming somewhat paranoid about the credibility of some transactions.
“I think these unilateral black listings are not helping anything,” said CARICOM Secretary General Irwin LaRocque last week, adding that “there ought to be some discussion and transparency on how these lists are arrived at.”
Meanwhile, delegations from several bloc member nations are headed to Trinidad next week for a meeting of the Caribbean Financial Action Task Force whose agenda includes the legitimacy of bank transactions and efforts to prevent the financing of terrorism and the financing of the proliferation of weapons of mass destruction.