Following the consideration of the Strategy and Action Plan submitted by the Committee of Central Bank Governors to Caribbean Community (CARICOM) Heads of Government, the Committee of Ministers of Finance with responsibility for Correspondent Financing, will now assume the oversight of its roll-out.
This was disclosed by Chairman of CARICOM and President of Guyana, David Granger, at a media conference as the two-day 28th Inter-Sessional Meeting of the Conference of Heads of Government of CARICOM came to an end yesterday.
The withdrawal of Corresponding Banking Relationships (CBR) was one of the focal points of the meeting.
Caricom’s Secretary-General, Ambassador Irwin LaRocque, during a media conference hosted at the Caricom Secretariat last Monday, said that the issue was one that continues to exercise the minds of CARICOM top officials.
Correspondent banking is a bilateral arrangement, often involving a mutual cross-border relationship in multiple currencies. A correspondent banking arrangement involves one bank (the correspondent) providing a deposit account or other liability accounts, and related services, to another bank (the respondent), often including its affiliates.
The arrangement requires the exchange of messages to settle transactions by crediting and debiting those accounts. Correspondent banking enables the provision of domestic and cross-border payments.
These relationships facilitate a range of transactions and services, including the execution of third-party payments, trade finance, the banks’ own cash clearing, liquidity management and short-term borrowing or investment needs in a particular currency.
In the Guyana context, Bank of America, the largest correspondent bank in the United States of America dealing with local banks, severed ties with several commercial banks last August.
Based on previous reports, additional problems have surfaced, with commercial banks and citizens both coming out with allegations of a foreign currency shortage. The nation has also seen rapid fluctuations in the exchange rates, specifically as it relates to the United States Dollar.
Granger said yesterday that the community recognized the need for a regional approach and continued concerted, urgent action: to address effectively the challenge posed by the de-risking strategies of the global banks which result in the withdrawal of correspondent banking services; to strengthen the integrity of the financial system in CARICOM Member States; and to attenuate the perception of the Caribbean as a high-risk Region.
“We noted, particularly, the need to strengthen Member States’ compliance with the global regulatory standards with regard to Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) and Tax Transparency Information Exchange,” President Granger said.
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