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Antigua-Barbuda’s PM address ‘assault by forces in the external community’ at Caribbean Association of Audit conference – Caribbean News Now

Antigua-Barbuda’s PM address ‘assault by forces in the external community’ at Caribbean Association of Audit conference – Caribbean News Now

ST JOHNS, Antigua – You meet at a time [Thursday, 27 June 2019] when the monetary providers sector of our area is beneath assault by forces within the external group. 

Disguised as considerations over “revenue erosion”, “tax havens”, “money laundering” and “counter-terrorism financing”, the aims of those external businesses look like designed to cripple competition within the financial providers sector.

Having dominated the sector till the mid-1980s, monetary centres in developed nations found that newcomers to the sector, notably within the offshore sector, have been turning into highly competitive.

Decrease tax charges and environment friendly and lower value providers for a variety of merchandise from jurisdictions within the Caribbean, led the European Union (EU), by means of the Organization for Financial Co-operation and Improvement (OECD) launching its “harmful tax competitors initiative”.

In impact, that initiative was designed to try to cease competitors in monetary providers by coercing smaller jurisdictions to undertake tax rates that approximated the upper charges in Europe.

Regrettably, smaller jurisdictions didn’t coalesce to withstand this imposition on their sovereign rights by a physique that had no worldwide authority to take action. As an alternative, some jurisdictions individually acquiesced to OECD and EU strain, fracturing any try at unified resistance.

The acquiescence of sovereign rights is a slippery slope; As soon as the slide begins, the fall is troublesome to cease, and virtually inconceivable to reverse.

Through the years, the EU and OECD’s assault on the Caribbean’s offshore financial sector crept into the onshore sector, engulfing all in their growing demands to push our jurisdictions out of the enterprise of offering international monetary providers.

Now, we now have come to the point the place in March of this yr, the EU blacklisted nations that they claim don’t meet tax good governance.

5 Caribbean nations have been on that listing – Barbados, Belize, Bermuda, Dominica, and Trinidad and Tobago. Others have been positioned on a monitoring record because we’ve got made commitments to implement modifications in our legislative and enforcement regimes by December of this yr, [2019].

These jurisdictions are Antigua and Barbuda, The Bahamas, St Kitts and Nevis, Saint Lucia, Anguilla, the British Virgin Islands and the Cayman Islands.

As a gaggle, CARICOM nations have expressed concern that the new listing by the EU Council constitutes an infringement of our sovereign proper of self-determination. We’ve stated that it’s starting to border on anti-competitive conduct, concentrating on the decimation of worldwide business and the monetary providers sector in the Caribbean.

CARICOM has stated collectively that we consider the EU Council is making an attempt to destroy the financial sector in our member states whilst we attempt to develop resilience in our economies to mitigate our inherent vulnerabilities of small measurement, restricted assets, and exposure to pure disasters. 

However, we stay in a world of intolerance for the event aspirations of the small and of the growing imposition of the doctrine which may is true. 

In fact, we might collectively take the EU to the World Trade Group on the idea that its actions are a restraint on our capability to trade. It isn’t an choice that we should always take off the desk.

We should always not take it off the desk as a result of it appears that regardless of how a lot our jurisdictions adopt draconian legal guidelines and pay for costly enforcement machinery; new and extra intrusive demands are made.

We’ve wounded our financial providers sector by a thousand cuts already.  Is it that the one time that external forces shall be glad is when our financial providers sector is lifeless and buried?

I say we can’t permit that to happen. I say, we’ve a proper to compete within the international market on a degree enjoying area with all.

I say, that the pursuits of our economies and of our individuals are as necessary and very important as anybody else’s, and we should always battle for them towards injustice and imposition.

You’re all aware of the serious menace posed to the economies of our nations and the well-being of our individuals from de-risking and the loss of Correspondent Banking Relationships (CBRs).

With out CBRs, the global monetary and buying and selling system would come to a halt and affected nations will drop into poverty from which recovery shall be pricey both in money and time, however more importantly in human life.

This grave menace has been hanging over the Caribbean now for almost half a decade; and it exhibits no signal of abating. Right now, in many elements of the area, nearly all of banks are lowered to only one correspondent bank, and at a particularly excessive value.

Consequently, the price of doing enterprise is escalating, whilst we attempt to deal with high debt, incurred largely to get well our nations from disasters. But, since 1966 the UN has recognised and codified in international regulation the proper of people to pursue their economic improvement as a elementary human proper.

In this connection, deprivation of CBRs to our nations is deprivation of a elementary human proper. It’s about the best to outlive and to prosper and not to wash-up on the shores of the rich, begging for a dwelling if not for all times itself.

As the lately appointed chair of the heads of presidency of the Organisation of Japanese Caribbean States (OECS), I’ve made it clear that underneath my watch there can be an organized and vigorous promotion to determine CBRs for re-engagement, re-assessment and re-risking of our monetary institutions.

We are ready to work with the Caribbean Association of Banks, our Central Financial institution, and international banking authorities to advertise agreed methods that may exhibit that our jurisdictions are compliant with the varied necessities of all the external businesses.

We may even comply with the Monetary Action Process Pressure’s AML/CFT tips to make sure that we aren’t included in any black or grey lists; however the place these lists are unreasonable and unfair, we’ll publicly and brazenly voice our considerations.

We won’t silently fade away, allowing our nations to wither and our individuals to endure. 

Some of our Caribbean jurisdictions have been improperly labelled as “tax havens”.  A “haven” implies that our banks maintain income and enormous deposit for multi-national firms and high internet value people.

But the fact is revealed in our reported bank deposit balances which are reviewed yearly by professional third-party companies. These balances inform a very totally different story and present that we are not any tax havens.

Within the case of Antigua and Barbuda, as an example, the audited and reported balances, recorded by the Japanese Caribbean Central Financial institution (ECCB) for domestic banks and the Financial Service Authority (FSRC) for worldwide banks, are lower than US$4 billion.

US$four billion in a world financial system of tons of of trillions of US dollars, is way too minuscule to probably qualify as a “tax haven”. 

Audit committees of banks, represented on this room, are aware that the US International Narcotics Control Strategy Report (INCSR), perennially describes each, single nation within the Caribbean – without exception – as a “major cash launderer”.

The US statute defines a “major cash laundering country” as one “whose financial institutions interact in foreign money transactions involving vital quantities of proceeds from international narcotics trafficking”.

Nicely, the Caribbean audit committees of the area’s banking sector, as the interior watchdogs over money laundering dangers, can attest that no vital proceeds from worldwide narcotics trafficking passes by way of our banks.

All worldwide transactions are traceable by individual, business, bank account and bank, and each of them is vetted by our banks as senders and receivers. Subsequently, we’re left bewildered over how our jurisdictions are positioned in this class of high-risk.

I ought to level out that this specific US report shouldn’t be a “blacklist” of jurisdictions, nor are there sanctions related to it. However it does unfairly create considerations amongst US banks that, in consequence, have been withdrawing correspondent banking relationships.

On this regard, Antigua and Barbuda’s diplomatic representatives in Washington have been in the forefront of efforts to evaluation the sources, course of and conclusions of the studies. 

This yr, some success was achieved, and the report was modified.

Encouraged by this progress, we’ll continue to induce the US to recognise that the full sum of money transacted by all our banks is way too small to warrant the labelling as “main money launderers”, and they should stop it. 

The reputational injury to our banks has frightened US banks and brought on them to draw back from offering correspondent banking relationships. This example is both unfair and unwarranted and threatens to un-bank our nations and plunge our economies into decline.

On a associated matter, a number of the individuals in this room are bankers from Antigua and Barbuda and different sister OECS nations that provide financial citizenship to certified candidates.

They are going to be aware of the growing challenges being posed to our Citizenship by Investment (CIP) programmes which have quite literally saved our economies from decline in the face of poor terms of trade, repeated natural disasters, diminished help and excessive prices of imports.

The CIP is just not distinctive to the Caribbean. It competes with comparable programmes in Europe and North America. Perhaps, that may be a cause why, like monetary providers, it’s beneath assault by exterior forces.

However CIPs contain larger and stronger due diligence on their transactions than apply to others. Definitely, CIPs forestall money-laundering since funds acquired by the government for accepted applicants are non-refundable. Nonetheless, some correspondent banks have shy-ed away from transactions associated to CIPs.

In this regard, I urge Caribbean banks involved on this service to show to their correspondent banks the acute care and due diligence utilized in managing the CIP product. By clear policies and procedures, they should show why CIPs don’t pose a danger to the integrity of correspondent banking relationships. I’ll go additional.

In my capacity as chairman of the OECS, I undertake, if needed, to assemble a workforce of government officers, CIP executives, AML/CFT specialists and our banks to carry joint conferences with correspondent banks to sensitize them on the integrity and safety of the CIP software and approval course of.

The CIP programmes are too necessary to our economies and to the welfare of all, together with the banking sector, for us not to run the extra mile that may be essential to disabuse misconceptions and to build-up confidence in them.

Financial establishments have a pivotal position to play in the monetary progress of nationwide economies. Robust financial establishments are identified by robust financial auditing and reporting.

Good reporting will appeal to confidence in the institution, which can then appeal to local and overseas direct investments that may grow the national financial system.

Nationwide prosperity is a circle that requires the great well being of our financial establishments. The global monetary world is evolving, and our banking sectors will need to take part actively to stay competitive.

Our banks must be nimble, flexible and properly suggested by their audit committees to securely meet the challenges and to benefit from the opportunities introduced by the advance of digital banking providers.

In the OECS, I commend Governor Timothy Antoine and his group on the ECCB for exploring the issuance of a high-security digital EC foreign money to function alongside bodily EC cash. This improvement might speed up real-time processing and settlements that may profit companies and individuals, saving time and enhancing efficiency.

The power of our banking sector has a higher position to play now within the prospects of our small economies than at some other previous time. Banks have to put themselves able by which they cannot only fulfill local regulation, they need to also be capable of stand up to worldwide scrutiny.

That’s the solely method they’ll overcome the fears related to securing correspondent banking relations which are so very important to them and to the economies through which they perform. However, within that framework, banks should also innovate and contribute to new initiatives that would make our Caribbean region stronger for sound funding and sustainable improvement.

In all this, audit committees have an important position to make sure that boards of banks are well-advised; that the integrity of the establishments is safeguarded; and that the deposits of shoppers are protected.

I do know that auditing committees of banks, more than any others, are very aware of the warning of Warren Buffet that: “Banking is excellent enterprise for those who don’t do something dumb.”

I’m confident our banks can be better on your scrutiny, your diligence and your sound advice.