The of loss of correspondent banking relationships due to a phenomenon known as de-risking, in which larger international banks terminate relationships with local banks in vulnerable economies, has been for the past months a huge crisis for Belize and other smaller countries in the region.
But the Caribbean is not alone in facing this detrimental problem as the commonwealth convened a meeting with banks and financial gurus and global regulators in an effort to explore its report on solutions to a problem that is threatening development in vulnerable economies in the Caribbean and Central America. The meeting which took place on Wednesday at the Commonwealth headquarters in London housed the Executive Secretary of the Financial Action Task Force (FATF) - the international anti-money laundering and counter financing terrorism standard setter, the British Bankers’ Association, HSBC Holdings, Santander and the Wolfsberg Group who all agreed that De-risking is curtailing countries’ access to essential cross-border financial services such as trade finance and international money transfers, which are essential to many economies. The issue is particularly detrimental to vulnerable economies and small states in the Commonwealth.
Attendees at the meeting also applauded the Commonwealth for proposing measures including setting best practice standards for money service businesses to boost their legitimacy and reputation, and improving guidance and risk-tolerance standards for banks that balance the need to prevent illegal activity with ensuring smaller institutions in developing countries are not excluded from the global financial system.
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