As we had reported some days ago, Prime Minister Dean Borrow along with the governor of the Central bank of Belize, Glenford Ysaguirre and financial secretary, Mr. Joseph Waight travelled to Washington D.C to meet with key banking officials regarding the problem being faced by the Belizean banking sector as it relates to the correspondent relationships and the recent de-risking. De-risking simply put is the action taken by US banks, under pressure from US regulatory agencies, cutting off correspondent relations with Caribbean indigenous and offshore banks unilaterally and with very little notice in fear of receiving multimillion dollar non- compliance fees.
Today in a press conference to discuss the outcome of the trip taken to discuss the de-risking movement, Prime Minister Dean Borrow said that he was assured by officials from the Comptroller of Currency, the Federal Deposit Insurance Corporation and Secretary of the Treasury that the withdraw of correspondent banks was not because of any pressure from the U.S regulators directing them to withdraw from correspondent relationships with Belizean Banks or even because of anything that Belize has done, but it is because for these banks the risk of tainted transactions that would cost billions if found outweighs the benefits of doing business with a small jurisdiction such as Belize.
Hon. Dean Borrow- Prime Minister
“The conformation that we got from every single regulatory authority with which we met that there is nothing wrong with the Belize jurisdiction, in fact those authorities said to us, if any particular bank decides it doesn’t want to do business in Belize don’t make that bank tell you that it is because of any pressure that we the regulators in the States have exerted upon them because we are fine with the Belize jurisdiction, not saying everything is perfect, but those regulators are satisfied that our banks do all that they need to in order to preserve the integrity of the system. The banks in the US then in engaging with our banks, in treating with our banks must on an ongoing bases be alert to question the transactions that come to them via our banks they must be always engaging in at it was surveillance of the various banking transactions with us to which they are exposed.”
Central Bank Governor Glenford Ysaguirre said that the biggest challenge that Belize faces when it comes to the issue of correspondent banks de-risking is the perception of being listed as a major center for money laundering and drug trafficking and the uncertainty of US banks.
Glenford Ysaguirre- Governor of the Central Bank of Belize
“The uncertainty that I think the US banks faced as to the consequences of a slip in any transactions as it relates to the compliance requirements is so significant that they are as the Prime Minister explained very skittish about doing business with any particular client of class of client for that matter and I think that the take away that we as the Central Bank has from this meeting which is something that we were confirmed to us that we were absolutely certain that there was no issue with our jurisdiction and now that we have gotten that confirmed by the treasury department, the office of the OCC and the FDIC that we should now seek to leverage that information and that confirmation with those banks that we seek to establish relationships with.”
P.M also makes mention that the best possible solution for Belize when it comes to rebuilding correspondent relationships with US banks would be to do so with smaller banks that have less business and are just as credit worthy as the bigger banks.
Hon. Dean Borrow- Prime Minister of Belize
“We will be going after the smaller banks that are just as credit worthy and the department of the US treasury has promised to help spread the word so as to encourage banks of that size ad banks that are going to be our target banks to in fact do business in Belize there is an immediate recognition and declaration that is cannot be in the interest of the US for our jurisdictions to be facing collapse ultimately if this correspondent banking relationship slide is not arrested and so we feel that the mission was a success it is still now for us to engage the individual banks that we are seeking to pursue, the private banks in the United States to get them to agree to do business with our jurisdiction, it is hard for the official sector in the US for the treasury and the regulators to instruct a private bank to do business with Belize but in making it clear that it is in everybody’s interest that Belize not lose that sort of business and in making it clear that the jurisdiction in Belize is as sound as could be desired and that oath to assist us with what ultimately am saying it remain our duty, our campaign to go directly now to the individual commercial banks in the US to get one or more of them to agree to do business with us.”
Although the Government of Belize and the central bank have reached out to one smaller tier two bank with assets around 20 billion dollars for potential correspondent relationships with local banks, but in the end it is up to all local banks to establish the relationship and meet all standards to be viable for correspondent relationship with such bank.
Glenford Ysaguirre- Governor of the Central Bank of Belize
“While the government maybe not the government but the Central Bank as the regulator would be able to give assurance to these banks about the compliance status of the jurisdiction itself each individual bank has to make sure that it meets all the requirements and convince the banks that they are applying to of their worthiness for the establishment of a relationship that burden still falls on the individual institutions and not so much the government itself or the Central Bank we look after the jurisdiction reputation so what the Central Bank would do would give assurance to these banks if they are entertaining applications from any of the banks in Belize as to the compliance status of those individual institutions.”
We will have more on the P.M’s press conference in tomorrow’s newscast.
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