As foreign banks, particularly those in the United States continue to sever ties with financial institutions in the Caribbean over money laundering concerns, the Bank of America has ended its relationship with “indigenous banks” in Guyana.
INews understands that the Bank of America sent a notice indicating that it was severing its corresponding relationship with “indigenous banks” in Guyana. The notice was sent about a month ago.
However, Governor General of the Bank of Guyana, Dr Gobind Ganga, has assured that there was no need to panic about the situation, since Guyana’s economy would not be impacted in any way. He clarified too that contrary to reports, the Bank of America was the only corresponding bank that has cut ties with Guyana to date.
He explained that Guyana was currently in talks with several other banks that were willing to form new corresponding banking relationships with local financial institutions.
“We have had other foreign banks that have shown interest in providing the kind of corresponding banking relationship to fill the void that the Bank of America is causing… These are banks from Europe and North America,” Dr Ganga stated.
When asked how far along were the discussions with these banks, Dr Ganga said that the talks were ongoing and projected that the negotiations should come to fruition shortly.
“So, at this time, there is no cause for concern, because the banks do have corresponding relationships and they are seeking others. The Bank of Guyana is assisting these banks in finding new corresponding banking relationships,” Dr Ganga reassured.
This matter was on the agenda for discussion at the 37th Caricom Heads of Government Meeting held in Guyana July 4 to 6, as Caribbean leaders try to tackle the cut-off of regional indigenous banks, referred to as de-risking – a situation that poses dire consequences for the Region, including crushing impacts on the wider economy.
De-risking is when international banks withdraw from their relationships with indigenous banks because of fears of money laundering and questionable sources of funds which would cause the international banks to receive heavy fines from their regulators.
Caribbean banking institutions rely on such relationships in order to allow residents to conduct international financial transactions. However, since last year, the Region has been facing the impact of de-risking and the issue has been occupying the attention of regional policy-makers, following signals by international banks that they were unwilling to continue carrying the business of regional banks.