BASSETERRE, St. Kitts – During the first quarter of this year, both the Ministry of International Trade and the National Entrepreneurial Development Division (NEDD) staff attended a ‘capacity building’ session on Derisking and Correspondent Banking at the Eastern Caribbean Central Bank, chaired by Ms. Angela Rouse. De-risking is “the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid, rather than manage, risk in line with the Financial Action Task Force’s (FATF) risk-based approach”.
Correspondent banking is the provision of banking services, via a bilateral arrangement, between domestic banks (respondent banks) and other banks (correspondent banks), to service transactions originating in different jurisdictions and often in multiple currencies.
The session sought to clarify and explain why Derisking is occurring, and it highlighted areas of significance such as high penalties for non-compliance, violations, reputations risk and brand protection. The Chairperson further elaborated on the ramifications, at the end of the Correspondent Banking segment, such shrinkage of the financial sector, increased cost of business and loss of Foreign Direct Investments.
The group was updated on the regional response by Member States which enabled the establishment of the Special Task Force; the CARICOM Ministers of Finance Committee on Correspondent Banking. The session proved to be both engaging and informative. The Ministry of International Trade and NEDD intends to engage the Private Sector on this important topic in an effort to build awareness through sensitization.