Additionally, the measures have also been making it difficult for foreign investors to access banking services.

This is why Caribbean leaders and officials met with financial institutions, US officials and other key industry and issue experts in Barbados on Wednesday, April 20, 2022, to discuss de-risking and correspondent banking relationships affecting the Caribbean region.

The Virgin Islands was represented by Deputy Premier and Minister for Education, Culture, Youth Affairs, Fisheries and Agriculture, Dr the Honourable Natalio D. Wheatley (R7), and Acting Financial Secretary Mr Jeremiah G.A. Frett at the Caribbean Financial Access Roundtable.

De-risking causing unnecessary problems

Premier and Minister of Finance Hon Andrew A. Fahie (R1) said during a press conference on April 22, 2022, that locally operating banks hold bank accounts in foreign banks, such as in the United States, to facilitate money transfers and other foreign transactions for their customers such as Virgin Islands (VI) residents and local businesses.

He said de-risking, also in a nutshell, is a practice where financial institutions decide not to provide services to customers in certain risk categories.

“I am sure many of our people and businesses have had the experience where, when they go to the bank for simple and basic services, they are being asked to produce a lot of documents – some of which they may not have, to go through all kinds of lengthy red tape, to wait for long periods to get a response from their bank on a request for service – and often times they are denied the service.”

Premier Fahie said these have been a side effect of the measures being required by the international regulators to combat financial and transnational crime and that the banks have also been experiencing problems where when they comply with what is asked of them, the regulators move the goal post and come asking for more requirements and more measures. “And this is also affecting their business and the service to customers such as yourselves.”

Banks adversely affected

Premier Fahie lamented that many foreign banks feel it is not profitable enough for them to put the measures in place to manage the risk in small economies such as the VI – especially with continuously shifting goal posts. “And so, what has been happening is that those banks, which are correspondent banks, drop our local banks from their service.”

He said the effect of this is that it makes it more difficult and costly for the local banks to provide the local public with certain services.

Another problem, Premier said, is that it makes it difficult for foreign investors to access banking services – such as simply opening an account – to do legitimate business. “And this deters foreign investment. As an international finance centre that provides valuable services to international business, it is critical that the banks operating in the jurisdiction have correspondent banking relationships, which are essential in facilitating cross-border trade and investment.”

The Leader of Government Business said this has been happening for more than a decade and it affects not only the Virgin Islands, but a large number – if not all – the countries in the Caribbean, and even elsewhere.

Representation to US Congress

He said the Roundtable summit was convened so that Caribbean leaders can make representation to the US Congress as a group – as a region – to explain the problems these international policies are causing for their people and economies, so that solutions can be found to these problems.

“The US Congressional Delegation was able to hear and see first-hand what their policies have been doing to the countries of the region. One of the outcomes of the Roundtable was that efforts will be made to have representatives of the Governments of the region and regional banks appear before a US Congressional Hearing in the near future, so that the problem and solutions can be discussed – and hopefully put an end to these unnecessary difficulties that residents and locally operating banks are facing.”

VI pledges support towards overcoming regional banking challenges

The Deputy Premier pledged the support of the Virgin Islands to working with regional Governments, the banks in the region and all the other stakeholders towards this effort to making banking and access to banking services easier, more convenient and more affordable to the people of the region, and especially the people and businesses in the Virgin Islands.

The Roundtable was a regional financial summit co-hosted by the Barbados Government and Congresswoman Maxine M. Waters, chairwoman of the United States House of Representatives Financial Services Committee. It was attended by Heads of Government, Ministers of Finance and other representatives from throughout the Caribbean region as well as senior executives of major International Financial Institutions such as Caribbean Development Bank and International Monetary Fund, other American and Canadian financial institutions, financial remittance services such as MoneyGram, a US Congressional delegation, CARICOM, the OECS, and other key industry and issue experts.

The Virgin Islands was represented by Deputy Premier and Minister for Education, Culture, Youth Affairs, Fisheries and Agriculture, Dr the Honourable Natalio D. Wheatley (R7), in photo, and Acting Financial Secretary Mr Jeremiah G.A. Frett at the Caribbean Financial Access Roundtable.

The Roundtable was a regional financial summit co-hosted by the Barbados Government and Congresswoman Maxine M. Waters (in photo), chairwoman of the United States House of Representatives Financial Services Committee.