Caribbean nations which are facing the withdrawal of correspondent banking services must unite to find workable solutions to the issue, presenters said at yesterday’s forum on the correspondent banking challenge in Kingston, an event organised by the Caribbean Policy Research Institute (CaPRI).

Economist and former Prime Minister of Barbados Owen Arthur who opened the discussion with his presentation stated that Caribbean nations must “form strategic alliances and commit the resources to join the many countries and institutions which have embraced the problem as being a legitimate cause”.

Economist Dr Damien King (CaPRI) Co-Executive Director, also a presenter, noting that the implications of lost banking relationships are severe, said a national and also regional approach to tackling the issue was needed.

King suggested that Caribbean authorities and regulators across jurisdictions should “cooperate and coordinate to develop streamlined definitions, standards and policies that improve accountability and so reduce compliance burdens.”

Caribbean heads of government, he said, should also advance lobbying efforts to the international level and raise the correspondent banking problem as a development issue.

Presenters at the forum cited a 2015 World Bank study, Withdrawal from Correspondent Banking; Where, Why, and What to Do About It, which states that the Caribbean is the most affected region worldwide by declining correspondent banking relations.

In the study a majority of banking authorities in the Caribbean region reported significant decline in correspondent banking relations (CBRs) during the survey period. It says that 89 per cent of jurisdictions reported experiencing significant to moderate declines in their foreign correspondent banking relationships.

King cited the World Bank survey of 110 banking authorities, 20 large banks and 170 small banks which showed that more than half of small banks said they were experiencing declines in correspondent banking relationships.

Some of the possible consequences of further de-risking within the region, Dr King said, was reduction in foreign direct investment flows and reductions in remittance flows with the consequent impact on development and remittance-dependent households.

“CBRs (correspondent banks) are critical to small economies for trade and investment.” Jamaica had a trade dependency of 91 per cent, he pointed out.

At the institutional level, he said, banks could together decide to standardise know your customer (KYC) protocols and create a database accessible for the use of all financial institutions.

Yesterday’s forum, held at the Jamaica Pegasus Hotel in New Kingston and sponsored by the Jamaica National Building Society, was intended to raise awareness of the challenge which presenters said could reduce trade and employment within the region.

Organised by CaPRI, it was attended by representatives of the Bank of Jamaica; Financial Services Commission; Jamaica Bankers Association; Jamaica Money Remitters Association; the Ministry of Industry, Investment and Commerce as well as financial institutions.

Dennis Chung, CEO of the Private Sector Organisation of Jamaica, said in his remarks at the forum that issues which should be addressed nationally include onerous taxation on banks and corruption in governance.