Premier attends Caribbean Financial Access Roundtable | Loop Cayman Islands

The content originally appeared on: Cayman Compass

A Cayman Islands government press release confirmed that the Premier and Minister for Sustainability & Climate Resiliency, Wayne Panton, attended the Caribbean Financial Access Roundtable on Wednesday, April 20 to discuss correspondent banking relationships as well as other matters.

According to the release, the Premier attended the Roundtable session at the invitation of the Barbados Prime Minister and Minister of Finance, The Hon. Mia Amor Mottley. Also in attendance were Congresswoman Maxine Waters, Chair of the Congressional Black Caucus, Congresswoman Joyce Beatty; Congressman Ed Perlmutter; Congresswoman Stacey Plaskett; Congresswoman Sylvia Garcia, and Congressman Troy Carter. In addition, several Heads of Government of CARICOM and associate members were present.

Correspondent banking was an important Roundtable topic as it is an area highlighted by Recommendation 13 of the Financial Action Task Force’s 40 Recommendations which set out a comprehensive framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction.

Under Recommendation 13, financial institutions should be required, in relation to cross-border correspondent banking and other similar relationships, in addition to performing normal customer due diligence measures, to do the following:

gather sufficient information about a respondent institution to understand fully the nature of the respondent’s business and to determine from publicly available information the reputation of the institution and the quality of supervision, including whether it has been subject to a money laundering or terrorist financing investigation or regulatory actionassess the respondent institution’s AML/CFT controlsobtain approval from senior management before establishing new correspondent relationshipsclearly understand the respective responsibilities of each institutionwith respect to “payable-through accounts”, be satisfied that the respondent bank has conducted customer due diligence (CDD) on the customers having direct access to accounts of the correspondent bank, and that it is able to provide relevant CDD information upon request to the correspondent bank.

In addition, FATF Recommendation 13 notes that financial institutions should be prohibited from entering into, or continuing, a correspondent banking relationship with shell banks and should be required to satisfy themselves that respondent institutions do not permit their accounts to be used by shell banks.

According to Barbados Government Information Services, Barbados Prime Minister Mia Amor Mottley emphasized the importance of correspondent banking relationships to Caribbean nations.

Mottley said:

If we don’t have a correspondent banking relationship that will allow us to trade with banks outside of our borders, then we will not be able to remit money, we will not be able to trade, we will not be able to basically engage with the rest of the world in anything that has a commercial nature….

This matter is too critical to us being able to survive and to grow our economies and to provide opportunities for our citizens. We cannot have financial exclusion.

Commenting on his attendance at the Roundtable session, Premier Panton shared that “as a leading global financial services centre, with vast experience in navigating financial services issues, it is important for the Cayman Islands to be an integral part of these discussions with US Representatives and Heads of CARICOM.”

Correspondent banking is an issue for the Financial Action Task Force because correspondent banks facilitate transfers of money between US correspondent banks and international respondent banks, the customers of which may not be known to the US correspondent bank. In addition, US correspondent banks may not be intimate with the details of the anti-money laundering and anti-terrorist financing compliance programs of international respondent banks, making it challenging for US correspondent banks to assess the money laundering and terrorist financing risk associated with transfers between respondent banks and correspondent banks (risks are higher, for example, where a respondent bank has not verified the source of funds or identity or business purpose related to one more high risk customers).

Some of the other key takeaways from the Roundtable event, according to Barbados Government Information Services are as follows:

Agreement to have an annual Caribbean-US Banking Forum, with the Caribbean Development Bank providing assistance. The Forum is expected to be held in October this year

Agreement to do a feasibility study as to whether a consortium bank should be established in the United States of America

Proposal to establish an examiner training academy in the United States to train state, local and federal examiners, as well as foreign examiners, including those in the Caribbean.

Congressional hearings would hopefully take place later this year, to allow CARICOM leaders to put their case on matters pertaining to correspondent banking

Deputy Premier and Minister for Labour, Chris Saunders, served as acting Premier during Panton’s absence.