The scourge of EU blacklisting

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Statement from Caribbean Association of Banks:

Some have long viewed the Caribbean as a true paradise for vacationers and tax evaders alike. As it relates to the latter, there have been tremendous efforts at the national and regional levels to change this unwarranted narrative.

Yet, as a region, we seem to be locked into a perpetual dance with the European Union (EU), being called off and back on to the dancefloor of the proverbial “blacklist.”

In the most recent developments, as reported by Reuters on May 05, 2020 and later confirmed within the EU Amended Delegated Regulation document, the EU intends to add three Caribbean jurisdictions, namely The Bahamas, Jamaica and Barbados, to their money laundering list.

These recent additions to the EU blacklist are largely due to a revision of the methodology used by the EU to identify high-risk third countries. This news has understandably generated much discussion, given that many banks and financial institutions within the region are still managing the effects of the loss of key correspondent banking relationships as a result of de-risking over the period 2015 – 2018.

Moreover, in the case of the Bahamas and Barbados the efforts made to become AML and CFT compliant cannot be overlooked. In fact, both nations were recently commended for the significant strides made in this regard.

It is especially disheartening to note, that the EU has made the decision to add the Bahamas to the blacklist while acknowledging that this nation was in the final stage of the FATF process to be delisted which has been unavoidably delayed by the COVID-19 pandemic. This was the only step missing for the Bahamas to be cleared by the FATF.

Consequently, the current position taken by the EU is both unanticipated and unwarranted. While the effective date of this amended blacklist is 1st October 2020, given the current Covid-19 climate, the timing of this EU report will likely further exacerbate the significant challenges being faced by the region’s banking and financial services industry at present.

Therefore, this latest decision by the EU warrants clear and concise justification and brings to the forefront the challenge faced by many Caribbean islands wherein the goalpost seems to be continuously changing.

The Caribbean Association of Banks remains resolute in our position that decision makers must be forth coming with the requirements of the region in an effort to meet the demands being placed on our economies when these “blacklists” are published. The further implications to Correspondent Banking and International trade cannot be denied.

It is noteworthy that we do recognize the effects of building strict and relevant compliance practices and policies, in an effort at keeping our delicate economies safe and as such we also have a vested interest in ensuring that we maintain the regulations that are developed and legislated. We are eager to work alongside stakeholders and maintain that in order to work together effectively and efficiently, we must maintain healthy, open and honest dialogue, which suggests understanding and an effort to ensure inclusivity as opposed to what appears to be a new era of exclusion.