By Staff Writer
Barbados Prime Minister Mia Mottley has issued a challenge to the United States government to review its policies on bank de-risking which she argues are unfairly harming the economies of Caribbean countries.
In what has been described as “historic” testimony before the US Congressional Committee on Financial Services, the Barbados leader said the policies being pursued by the US government, the Organisation for Cooperation Cooperation and Development (OECD), Financial Action Task Force(FATF) and other international financial sector watchdogs were counterproductive.
“The reality is that delisting has been recognised by the Bank of International Settlements as the greatest reason why correspondent banks leave and remove their relationships. And therefore these lists are deleterious. We believe that if we can move off these lists, we are in a position to be able to at least have a better chance to make the case that the substantive concerns that we all have to fight crime are being met,” she told the committee members.
Ms Mottley made the point that “the reality is that the State Department’s report once again - we’ve been complaining for years - is prepared by junior officers. It is not robust. It does not allow us a rate of response, and it does not take into account improved stability during the course of the year.”
“We are here because the delisting process that has taken place whether through the Financial Action Task Force or the OECD, or further as a result of actions taken for enhanced due diligence by those who take the lessons from the EFF, ATF and the OECD,” she argued.
“It means that those correspondent banks over the course of the last 10 to 12 years have made a judgement that we are simply too small as I’ve just told you in order to get involved because the enhanced due diligence means increased costs of regulation, increased cost of compliance. And rather than do business with us, they say thank you, but no thank you. What it has meant is that almost every country in our region over the last decade, with the exception of two or three, have had a loss of more than 30% of their correspondent banking relationships.”
The Barbados Prime Minister also addressed the extent of the economic impact as she said investors are now considering it too costly to do business in the region, because of the hurdles they have to clear due to expanded and excessive due diligence requirements.
“What I haven’t spoken about is the millions of dollars that we have to spend as a small state to try to satisfy those considerably larger questionnaires that exist in circumstances where we know that the money isn’t in us and that it’s not us where the money launderers, money launderers are hiding them in plain sight. But you’re coming to us to give yourself a sense of comfort and that is our concern with these lists.”
The Barbados Prime Minister argued that the enhanced restrictions are wrongly targeting Caribbean countries while dubious entities exploit loopholes to hide their assets in metropolitan financial centres such as London, New York and other states in the US, along with Luxembourg and other financial centres in Europe.
“When we comply with the list, a new list comes out with different concerns. And we’ve seen it whether in terms of money laundering, and terrorism financing or in terms of tax transparency with the OECD. If you go back we’re continuously on these lists facing the consequences of that withdrawal.”
“Therefore, she concluded, “what we face is a situation of everything that you set out to achieve, which is the avoidance of terrorism financing, the avoidance of money laundering, on which we are all agree is likely to happen because you’re driving people underground, there is no benefit in driving others or making our countries uncompetitive, such that our economies are at risk of becoming underdeveloped or failed states.”
Prime Minister Mottley’s testimony to the US House Financial Services Committee on the topic of ‘Impacts of De-Risking on the Caribbean’, marked the first time in nearly 40 years that a Prime Minister had testified before Congress.