– CEO worried about AML effects
By Kiana Wilburg
While the Guyana Bank for Trade and Industry (GBTI) signed a two-year risk management agreement with the International Finance Corporation (IFC) yesterday, its Chief Executive Officer (CEO, Mr. John Tracey expressed his concern over the looming effects of the Anti Money Laundering and Countering the Financing of Terrorism Bill which is still before the Parliamentary Select Committee.
At the Bank’s corporate office, in Kingston, Georgetown, Tracey introduced the members of the IFC team to media operatives.
Heading the IFC team are Sergio Selaya and Lillian Thyssen, and from the Netherlands-based company, Financial Access – Peter Harper, Patricio Puga, Andre Koch, Gerald Mudzamiri and Jan Cherim.
The agreement will serve to establish solid risk management practices in order to build a strong foundation for its Small and Medium Enterprise (SME) lending.
The collaboration will help to support GBTI’s future expansion and financial sustainability by harmonizing their risk management policies in such a manner that it increases efficiency and takes advantage of new market opportunities.
The IFC is a member of the World Bank Group. It is also the largest global development institution focused exclusively on the private sector.
While the members of the IFC panel were unable to disclose the exact cost of the project, Mr. Selaya did explain that it is a rather costly venture which entails a programme aimed at identifying all forms of risk, including credit and marketing.
Tracey then explained that the project is a most important one as banking itself is a risk. He noted that while the team brings over one hundred years in banking experience, it will also be instrumental in bringing a scientific approach to its risk management practices.
He added too that their regulations will also be analyzed. He said that there are different types of legislation that govern the way in which all banks operate and those regulations have to be in keeping with the risk management approach that they will be taking.
More importantly, the CEO spoke to the contentious AML Bill as he stated that while they are in the process of implementing special software that will enable the bank to better detect suspicious transactions, it is important that it be passed at the national level.
“Banks can do all they want, but that piece of legislation is important, and I do fear what is to come if it is not passed. We are already experiencing the effects. While we are able to facilitate large transactions we have been under a lot of scrutiny, and there have been a lot of queries, so it really delays the process. Banks, I believe, are already putting systems in place to be ahead of the legislation, but I don’t think that would make much sense if it is not dealt with properly at the national level, for the risk of non-compliance is very severe.”
Moreover, the CEO did confess that it has been lagging behind in SMEs lending and he said that this was due to a number of factors.
However, with the two-year risk management project, he believes that this will definitely be changed.
“We were lagging in the area of offering loans to small businesses, but we are hoping to change that, hence the implementation of the programme, and it is an area of focus for the IFC. Credit risk is the main risk that banks face, and when you are able to dispense credit efficiently you are able to offer more loans. It’s a two-way street. Small businesses will have to up their profile and we will have to do more to better assess businesses. The project will be able to help us in this regard as well.”
To this end, Canadian Ambassador to Guyana, Dr. Nicole Giles, who was instrumental in getting the project financed said, “Improving risk management by Caribbean banks is a key element of any comprehensive strategy to promote Private Sector Development and, in turn, economic growth in the Caribbean. This is why we are proud to provide funding to the IFC to implement this project.”
“Currently, an estimated 65 percent of Guyana’s SMEs are unserved or underserved by the country’s financial system, which limits their ability to grow and create jobs. This is a significant economic loss to Guyana, especially when we take into consideration that SMEs account for over 90 percent of all businesses in Guyana.”
Further, the envoy explained that SMEs consistently cite access to credit as one of the greatest operational barriers to flourishing businesses. SMEs are a significant contributor to the global economy, often employing more than 60 percent of the workforce. Yet the sector is considered high risk and largely underserved by the financial community.
In spite of this, the Ambassador remains optimistic that the outcome of this initiative will help GBTI to design a more comprehensive prediction model that is specifically tailored for the SME sector.
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