The Amer­i­can pres­i­dency and Car­ib­bean bank­ing and fi­nance

Jamaica Gleaner - - OPINION & COMMENTARY - Robert Bud­dan Robert Bud­dan is a lec­turer in the Depart­ment of Gov­ern­ment at the Univer­sity of the West Indies, Mona. Email feed­back to col­umns@glean­erjm.com of Robert.Bud­dan@uwi­mona.edu.jm.

THE NEXT Amer­i­can pres­i­dent must pri­ori­tise re­cov­ery from the cat­a­strophic 2010 earth­quake and dev­as­ta­tion by Hur­ri­cane Matthew in Haiti. He or she must con­tinue co­op­er­at­ing with Cuba against mur­der­ous drug traf­fick­ers and Ja­maica must get to the cen­tre of these op­er­a­tions. But other ma­jor con­sid­er­a­tions for the re­gion are the bank­ing sys­tem and off­shore fi­nan­cial cen­tres; they are be­ing linked to tax eva­sion and tax avoid­ance, money laun­der­ing, and pos­si­ble ter­ror­ist fi­nanc­ing.

The in­tegrity of the bank­ing sys­tem is crit­i­cal to us all. Ac­counts can be breached and life sav­ings stolen. We must all take great in­ter­est in cy­ber­crime.

But there are two other con­cerns. For a num­ber of elec­tions now, Amer­i­can can­di­dates have been rail­ing against Car­ib­bean tax havens. The mas­sive rev­e­la­tions of the Panama Pa­pers and the Ba­hamas Pa­pers have fur­ther drawn no­to­ri­ous at­ten­tion to tax havens.

Banks keep ac­counts with each other across dif­fer­ent coun­tries, called cor­re­spon­dent bank­ing. If your Car­ib­bean bank wants to draw on an Amer­i­can bank for Amer­i­can dol­lars, say for busi­ness, it has to first keep some of its Amer­i­can dol­lars in that other bank. The Amer­i­can bank gets se­cu­rity and lever­age against risk. If the Car­ib­bean bank is (even un­know­ingly) be­ing used for money laun­der­ing then the laun­dered money could find its way back in the Amer­i­can bank. Banks don’t want to be used for money laun­der­ing and don’t want to pay the cost of ex­tra reg­u­la­tion.

They tighten up bank­ing reg­u­la­tions to make part­ner banks scru­ti­nise their clients closely and end or limit cor­re­spon­dent bank­ing ar­range­ments with them. But these ac­tions se­ri­ously limit the Car­ib­bean banks’ abil­ity to ser­vice their clients’ for­eign cur­rency re­la­tions.

Then there are fi­nan­cial ser­vices. Off­shore shel­ters set up se­cret ac­counts for their clients. These ac­counts might be opened to hide money so that it is not taxed or to laun­der drug money or se­cretly fi­nance ter­ror­ism.

Sev­er­ing cor­re­spon­dent bank­ing ties in the Car­ib­bean will neu­tralise trade and in­vest­ments. Last week, I em­pha­sised work­ing against drug traf­fick­ing to se­cure the in­tegrity of our economies and so­cial life. Oth­er­wise, gang­ster cap­i­tal­ism will get worse and act as a dis­in­cen­tive to new trade and in­vest­ments.

The Amer­i­cans al­ready be­lieve that much of Car­ib­bean real es­tate, tourism, con­struc­tion, and fi­nan­cial cen­tres are cor­rupted by laun­dered drug money. They are also sure that they are los­ing bil­lions of dol­lars in tax rev­enue hid­den away in the Car­ib­bean.

At least 16 banks in five Car­ib­bean coun­tries have lost all or some of their cor­re­spon­dent re­la­tion­ships al­ready. And, here is some­thing re­ally wor­ry­ing: since 2013, the United States Jus­tice Depart­ment has felt that re­mit­tance ser­vices are a high risk for fraud and money laun­der­ing. If these re­mit­tance com­pa­nies are sub­se­quently re­stricted, this will se­verely im­pact pock­ets and fam­ily bud­gets by US$9 bil­lion across the re­gion. This has started hap­pen­ing in some ter­ri­to­ries.

LET US PRO­TECT OR­DI­NARY FOLK

The Car­ib­bean is treat­ing these is­sues as a pri­or­ity. So, we must se­ri­ously en­force anti-money laun­der­ing and coun­tert­er­ror­ist fi­nanc­ing reg­u­la­tions. We need to pros­e­cute peo­ple. We should sep­a­rate is­sues of bank prof­its and pro­tect the hard-earned re­mit­tances com­ing to Car­ib­bean fam­i­lies. We can­not al­low or­di­nary and in­no­cent peo­ple to suf­fer.

Let us im­ple­ment cy­ber­crime/ se­cu­rity mea­sures to pro­tect our hon­est de­posits and in­vest­ments. Let us im­prove the in­tegrity of off­shore cen­tres and their se­crecy scores. And, we must pro­tect re­mit­tance flows with new cor­re­spon­dent bank­ing rules when we talk to the new Amer­i­can ad­min­is­tra­tion.

Our lead­ers must give no rea­son to be­lieve they are not be­ing sin­cere. They must de­clare their fi­nances as in­tegrity legislation re­quires and ex­plain where any ex­tra­or­di­nary wealth comes from. Any lack of sin­cer­ity will bring harsh penal­ties against us all, and the or­di­nary peo­ple who al­ways pay the price.

It is more lu­di­crous if we have to ne­go­ti­ate with a Don­ald Trump as pres­i­dent, who boasts of not pay­ing mil­lions of dol­lars in taxes which, he says, shows his “bril­liance”. And a Trump ad­ver­tise­ment says mil­lions are put into the Clin­ton Foun­da­tion by crim­i­nals!

POL­I­TICS OF OUR TIME

Newspapers in English

Newspapers from Jamaica

© PressReader. All rights reserved.