WASHINGTON, DC, USA (CMC) —Chairman of the Caribbean Community (Caricom), Prime Minister Dr Timothy Harris of St Kitts-Nevis, says one of the biggest economic and financial challenges facing the 15-member grouping is the practice engaged by the large global commercial banks to terminate their correspondent banking services.

Harris, speaking at the National Press Club here, said that the global commercial banks were also offering their services at unconscionable high rates.

“The practice has a harmful effect on the flow of remittances from those living and working abroad to their loved ones and business associates at home who rely on this source of funds to provide for their sustenance.

“The practice has a harmful effect on commercial trading activity that disrupts the flow of payments for services rendered. What was once an overnight bank-wire transfer of funds from the US is now taking as many as three months, or more, for delivery,” said Harris, who earlier participated in a two-day Caribbean Central Bank forum organised by the World Bank Group on the digital economy in the Eastern Caribbean.

Harris told the journalists that the “very damaging practice” by the global commercial banks “has the perverse effect of channeling many of these transactions to an underground black market through unscrupulous carriers with no certainty or guarantee of delivery.

“This is particularly harmful to small island developing states such as St Kitts and Nevis with a large overseas population in the diaspora. The large banks claim that they are seeking to minimise the risks associated with money laundering and terrorist financing to which they are subject to heavy fines for violating Anti-Money Laundering (AML) and Combatting the Financing of Terrorism (CFT) regulatory guidelines.”

But he said that the reality is that there is no evidence of significant money laundering activity in St Kitts and Nevis.

“It is not a major global financial centre. Much of the world’s money laundering transactions take place in the major capitals of the world, such as London, New York, and Delaware. Moreover, every Caricom country has tax information exchange agreements with the US and major EU countries.”

Harris said that tax information is readily available and is provided through the designated agencies of governments in the United States and Europe.

“There is, therefore, no sound basis for labeling our small island developing states as ‘tax havens’ or non-cooperating tax jurisdictions,” he said.

Caricom countries have been critical of Europe in labelling several regional countries as tax havens and earlier this month, the EU announced it had removed Barbados, Bermuda and Aruba from its blacklist of non-cooperative tax jurisdictions.

In his address to the National Press Club on Friday night, Prime Minister Harris said that over the past two days, Caribbean countries have been focusing on digital technology and how it can transform the lives of Caribbean people for the better.

He said the world took notice in November 2016 when his twin-island federation, the smallest independent country in the Western Hemisphere, was honoured at the 14th World Telecommunication/ICT Indicators Symposium with two awards for outstanding improvements in information and communication technology (ICT) development.

He said since then several Caribbean countries, like The Bahamas, Trinidad and Tobago, Grenada, Antigua and Barbuda, Dominica, St Vincent and the Grenadines, and Jamaica have been ranked within the top 100.

Harris said the region aims to transform from mere consumers of technology to innovators and suppliers of digital services” and that the partnership with the World Bank could help the Eastern Caribbean Currency Union (ECCU) to deepen integration through the harmonisation of policies and the legislative framework that is critical to the development of the digital economy.