CARICOM should combine talks on correspondent banking with remittances

Jul 22, 2016 News

– ACP-EU official
The issue of de-risking has become topical within the Caribbean region. However, although it

ACP-EU official Jermaine Grant

can be addressed in a vacuum, it is the view of Jermaine Grant, an official attached to an international body, that those discussions should be annexed with a conversation on remittances.
Grant is the Regional Programme Officer for the African Caribbean and Pacific-European Union (ACP-EU) Migration Action, International Organisation for Migration.
He was at the time delivering an overview on Migration and Remittances at a workshop on Migration and Development: Mobilizing Financial and Business Know-How Resources Generated through Migration at the Cara Lodge Hotel last Wednesday.
Grant reminded the gathering that Member States of CARICOM had recently agreed to hold a stakeholder conference on the impact of the withdrawal of correspondent banking on the region. It is expected that banks and regulators from the region, United States of America, Canada, Europe, International Development partners and representatives from civil society groups, will participate in the event.
According to Grant, the issue of de-risking is delicate and its attraction by the CARICOM member states should go further to involve the issues which surround migration and remittances.
Grant opined that a conversation with a nexus on remittances with representation of money transfer operators, would serve to enrich the region’s conversation on correspondent banking. It is his view that combining the two issues would bolster the region’s approach in dealing with de-risking.
According to Grant, at this function it would be advantageous for remittances to be a part of the discussion since it would aid the region to map a trajectory for the benefit of all affected stakeholders. He asserted that de-risking speaks to the posture of correspondent banks.
De-risking is the termination by an international bank from the local banks. International banks do this when the situation arises whereby there is fear of money laundering and uncertain sources of funds. Conducting business with such banks causes international banks to become vulnerable to being fined by their regulators.
De-risking continues to be a topical issue since many international banks have indicated their reluctance to continue doing business with local banks. Recently, Bank of America terminated its correspondent banking agreement with the Bank of Guyana. It has been reported that a European bank is to fill the gap left by the American financial institution.
Correspondent banking is important to the region, since it allows citizens to conduct transactions abroad. This coincides with the issue of remittances, since members of the Caribbean diaspora continue to send money back home to finance the wellbeing of relatives.
Also speaking at the event was Minister of Foreign Affairs Carl Greenidge who said that overseas-based Guyanese have been moving away from just supporting their families to funding investment projects. He said that remittances have now become one of the important factors in the macro economic performance of the country.
Greenidge said that in 2012 Guyana recorded an influx of US$469M in remittances which represented 16% of the country’s GDP.