And “respect” is just what the Prime Minister and his Finance Team tried to get when they went to Washington and spoke to the US Treasury Department at the end of January. Strict US banking regulations have forced the top banks in the US to cut correspondent banking ties with three of the four major commercial banks in Belize. The Prime Minister and his team got a commitment from one major US Bank that they would be willing to open a correspondent portal with Belize’s Banks – but since then there hasn’t been much visible progress. He gave us an update yesterday:
Rt. Hon. Dean Barrow, Prime Minister
"We are in touch and just had an update from certainly the one bank that we were able to get the regulators in Washington to speak to and it would appear that they are certainly prepared to engage perhaps not full scale. It appears there might want to start small and then grow but it seems to me that we're making some progress."
Is There a Light At the End of the Correspondent Banking Tunnel?
Where the dreaded loss of correspondent banking relationships is concerned, PM Barrow says there is little to report following the CARICOM Heads of Government meeting held in Placencia recently. Coming out of that meeting a decision was taken to send a high-level mission on a round of meetings with federal regulators and other pertinent agencies. That decision hasn’t taken wings just yet, but there is some hint of good news where Belize is concerned.
Prime Minister Dean Barrow
“In terms of the operationalizing, I don’t know that that has happened and both things need to happen. But remember, if we move from CARICOM to Belize—from the general to the particular—we are well out the blocks. We continue with our Belize specific campaign. As I said we are in touch and just had an update from certainly the one bank that we were able to get the regulators in Washington to speak to and it would appear that they are certainly prepared to engage, perhaps not full scale…perhaps they might want to small and then grow. But it seems to me that we are making some progress, albeit, perhaps incremental. We, CARICOM apart and we welcome the fact of collectivity…also I saw the IMF that we spoke to when we went to Washington has now put forward a plan to try to assist. I can’t even remember the details, but there is activity—whether it is activity that will provide to be meaningful, I am not entirely sure—but at least something is happening. And we do feel that we have therefore made some progress and should be encourage to double our individual country effort even as we try to participate in the collective effort as well.”
PM Barrow Says the US is Hypocritical
The derisking phenomenon is an offshoot of continued pressure from the U.S. to crack down on money laundering and other financial improprieties, real or perceived. The superpower feels that illegal money could be used to fund the narcotics movement into the US or even terrorism. Belize has been feeling the pinch of crippling financial regulations, and when PM Barrow spoke on the matter on Tuesday he was clearly frustrated at what he calls the hypocrisy of the U.S.
Prime Minister Dean Barrow
“They say that look as though this is a demerit, this is a fault…government is encouraging the offshore sector, government is encouraging offshore banking—well they pretty much killed off the offshore banking with their withdrawal of correspondent services. But what the hell is wrong with encouraging the offshore sector. You know these people, dafter they do all sorts of things to us—control commodity prices—and they tell you, you need to diversify. When you try to diversify in terms of services, in terms of something like the offshore jurisdiction; no matter how much you attempt to be squeaking clean, no matter how you legislatively try to set up some sort of firm, they just don’t want you to do it. You go to the states though and they can…they tell you about bearer shares but you can set up companies. I mean it is…I’m afraid there is a level of hypocrisy that is very upsetting, but they are the big boys; they are in control and we just have to try our best. Ultimately they may well succeed in killing off the offshore sector as well. But we are certainly not going to say uncle and certainly not Uncle Sam. So we, the IFSC and the practitioners themselves in the offshore sector are well aware of how much they need to be extra careful because these people come down on us like a ton of bricks when there is any perceived violation.”