The Permanent Council of the Organisation of American States convened a special meeting on Wednesday in its Simon Bolivar Hall to discuss Banking and Financial Services in the Caribbean.
The meeting was called at the request of CARICOM member states, and convened in keeping with the OAS’s responsibility to seek solutions to urgent problems that affect its member states. An introductory statement from CARICOM spoke to the challenges facing the sector, particularly noting that “despite the full compliance of our member states with the requirements of international bodies and in spite of bilateral agreements with OECD member states, several of our jurisdictions have been wrongly described by a few states as “tax havens” or countries of concern for money laundering. Worse yet, the entire region has been unfairly tagged by some states as a “high risk” area for financial services.”
High on the agenda was the progressive decline in correspondent banking relationships (CBR) available to the banking sector in CARICOM member states as a result of the de-risking strategies employed by global banks. These correspondent relations are considered crucial to the economies of CARICOM; and, furthermore, would destabilize the financial sector in Member States with deleterious effects on growth and economic progress, as well as national security.
The CARICOM statement referenced the Charter of the Organization of American States, Chapter 1, Article 2, (f) which enjoins member states “to promote by cooperative action, their economic, social and cultural development”. “By introducing this matter to the Permanent Council and by proposing a Declaration on it, the proposers from CARICOM and Central America seek no more than the fulfilment of obligations to each other that the OAS Charter has established.”
The Council heard presentations (see below) from expert speakers:
- Bruce Zagaris of the firm Berliner, Corcoran & Rowe;
- Ryan Pinder, Member of Parliament and former Financial Services Minister of The Bahamas; and
- Daniel J. Mitchell, a Senior Fellow at the Cato Institute
Dr Farah Diva Urrutia, Director General for Legal Affairs and Treaties of the Ministry of Foreign Affairs of the Republic of Panama, also spoke.
Sir Ronald Sanders, outgoing President of the OAS Permanent Council, commented today on the importance of convening the meeting to ventilate this issue before high representatives of the 34 states of the Americas. He noted the objective of exposing the adverse effect on the financial services sector and the economies of Caribbean countries as a consequence of unfair practices in certain powerful member nations of the Organisation for Cooperation and Development (OECD).
Sir Ronald said the expert speakers left no doubt in the minds of the Ambassadors that all of the countries in the Caribbean and several in Central America are being unfairly targeted as “high risk areas” for financial services and that cutting off CBRs has little to do with the risk of money laundering and terrorism financing and much more to do with the smallness of the rewards global banks receive from doing business with Caribbean banks when those small rewards are measured against possible huge penalties with which they are threatened by regulatory bodies. He encouraged governments of affected countries to take this matter to truly representative organizations such as the United Nations and away from informal groupings of self-serving countries such as the OECD and FATF. “The meeting at the OAS was a first step to dealing with the issue in a genuine multilateral body,” said Sir Roland. “What happened in the OAS on March 30th was an important step in exposing the double standards to which the Caribbean region is being subjected on financial matters, and to building a wider international consensus.”
Bruce Zagaris