Correspondent Banking issues between regional and US Banks are receiving the attention of the USA’s National Security Council

The threat of loss of correspondent banking relationships to members has become a key focus for CAB for 2015.

The following events have heightened the CAB’s concern with regard to the stability of correspondent banking relationships for our members:

  1. One member has received notification from their main US correspondent advising them that they are reviewing the relationship, as it is no longer in line with their business strategy. In addition, another correspondent has advised that they are reviewing the jurisdiction with a view to ascertaining whether they will continue to service banks there.
  2. One US correspondent has stopped processing US cheques for some members.
  3. Some members have tried to establish new relationships but have been denied, with no clear reasons provided.
  4. Discussions with key foreign stakeholders have revealed that there is a perception of the region as being high risk and that securing relationships will become more challenging. There is also the challenge of adequate return for carrying the compliance risks that some of our smaller banks pose.

CAB’s Response:

  1. 1. CAB representatives attended the FIBA AML Conference in Miami, primarily to discuss this issue with key stakeholders.
  2. CAB wrote to the CARICOM Chair and Secretary General, on 17th February 2015, highlighting the issues and serious impact on the region and requested that the issue be raised at the highest level in the USA.
  3. CAB wrote to other stake holders such as CDB, World Bank, IMF and Bankers Associations throughout the Caribbean to bring the issue to their attention and solicit their support and assistance in raising the issue with other stakeholders.
  4. 4. CAB conducted a survey among members in order to determine the extent of the challenge being faced. Twenty two members responded so far; the results of which indicate that there is a 77% dependence of Caribbean banks on one correspondent in particular, thus highlighting the vulnerability of the region. We urge members who have not responded to the survey to do so urgently in order for us to carry out a comprehensive evaluation.
  5. Discussions were held with an IMF representative to solicit their assistance.
  6. Discussions were held with three main correspondent banks.
  7. CAB recommended that CARICOM raise this matter with President Obama at the meeting with CARICOM Heads of Government in Jamaica, 9th April 2015.

Key Outcomes:

  1. The matter was raised at the CARICOM Heads of Government meeting in the Bahamas in February 2015 and consequently, the CAB was invited to be part of a ministerial committee assigned to seek solutions to address the issue.
  2. Hon. Gaston Brown, PM of Antigua, addressed President Obama on this issue during his visit to the region in April and the President did promise to investigate the matter. (as referred to in CAB’s press release attached)
  3. CAB has since been contacted by the Political and Economic Affairs Officer in the US Embassy of Barbados who advised that the issue of Correspondent Banking Relationships which was raised with President Obama during his recent visit to Jamaica is receiving the attention of the National Security Council (President Obama’s closest advisors). It was mentioned that individuals at all US embassies, in the region have been asked to speak with key stakeholders on the matter.

We assure members that we will do our utmost in advocating on this issue and will keep you abreast of further developments.

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The Caribbean Association of Banks, Inc. is the representative body and recognized voice for banks and other financial institutions in the Caribbean. We seek to influence policies and legislation which impact the sector by advocating on our members’ behalf and participating in the global network of similar institutions.

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