Latest update February 6th, 2025 7:27 AM
Bank of America to cut ties with local banks by August – says Central Bank Governor
Central Bank Governor, Dr. Gobind Ganga
Bank of America, the largest correspondent bank in the United States of America dealing with local banks, will be cutting ties with several commercial banks in Guyana by the end of August.
This was confirmed by Central Bank Governor Dr. Gobind Ganga, in an interview with Kaieteur News on Sunday. Ganga indicated that the notice from the bank had come last month. However he sought to provide assurances that the fallout will be negligible.
“At this time it is just Bank of America,” Ganga said. “(But) we expect that other banks will take up the slack. It is also happening in the Caribbean, the entire region is being affected. Other countries would have had ties cut since last year with Bank of America.”
Ganga stressed that it was just a few commercial banks. However he declined to reveal the names of the local banks cited by Bank of Guyana. The Governor also emphasised that the Bank of America’s decision could not solely be attributed to de-risking, but to other factors as well.
“There are a number of factors. One is de-risking. They may want to deal with bigger customers or (they may have) a higher level of liquidity. It (could) also be a question of profitability.”
Back in May, Attorney General Basil Williams had expressed worry about the possibility that Guyana may suffer as a result of de-risking. De-risking happens when financial institutions exit relationships with and close the accounts of clients who they deem to be “high risk.”
The Bank of America
For some time now, there have been moves towards de-risking with businesses, foreign embassies, nonprofit organizations and correspondent banks. This has resulted in account closures in the United States, United Kingdom, and Australia.
Following the 37th Heads of Government Caribbean Community (CARICOM) meeting last week in Guyana, the regional bloc had announced plans to lobby the US government against these measures.
Low profitability, concerns about reputations, and increased Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) scrutiny have all contributed to concerns about de-risking, which can further isolate a country’s financial system from the global fiscal makeup and undermine AML/CFT objectives.
Guyana is still on the watch list of the Financial Action Task Force (FATF), which is the international body that monitors countries with weak legislation and systems in place and have the potential to be money laundering and tax havens.
Guyana has not yet satisfied all of the recommendations made by FATF. During the time of the People’s Progressive Party (PPP) in Government, the passage of laws such as the AML/CFT Bill were held up in the National Assembly, further weakening Guyana’s cause.
However, under the new government, FATF has consistently given Guyana positive reviews. A high level team comprising FATF/International Coordinating Review Group (FATF/ICRG) Co-Chairs will be in Guyana come September, to conduct on site inspections of several of Guyana’s institutions in order to verify Guyana’s progress and its readiness to come off its watch list.
Williams had revealed that the institutions to be visited would include the Special Organized Crime Unit (SOCU), the Financial Intelligence Unit (FIU), the Bank of Guyana, Guyana Securities Council (GSC), money transfer agencies and the commercial banks.
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