January 13, 2016
IMAGINE THIS. You, a partner or family member is working overseas. You have been sending money home to support an aging relative or to make a regular payment on a mortgage. You go to the Caribbean money transfer business that you have always used, only to be told your money can no longer accepted because there is no intermediary bank in Europe or the US willing to work with it despite its absolute reliability and positive track record.
De-risking by correspondent banks is not only driving illegal money to less transparent channels, but if not addressed will have the effect of damaging the contribution that remittances make to GDP, and touch social stability by excluding the unbanked at the poorest levels of society. Although seemingly remote from everyday life, correspondent banking is central not just to the global flow of currency and trade, but in the case of the Caribbean to social sustainability through remittances, which in 2014 were, according to the IDB, worth US$9.9 billion, but probably significantly more if flows into Cuba were included.
During 2015, the issue was raised by Caribbean Central Banks with the IMF, and by private sector bodies in countries from Belize to Guyana. More recently such concerns were incorporated into the final communiqué of the annual meeting between Britain and its overseas territories, with the UK agreeing to work to maintain viable banking and financial sectors there.