Considerations for Legal Practitioners on De-Risking in the Caribbean

There has been a recent trend for large international correspondent banks to restrict or terminate their correspondent banking relationships (CBRs) with certain regional respondent banks1, to “avoid, rather than manage, risk in line with the risk-based approach”2. This is known as “de-risking”. As a result, stricter conditions have been required by regional commercial banks for basic banking services, such as opening and maintaining accounts, payment services and collections. This has affected local companies and individuals as well as companies in the international business and financial services sector, leaving them unable to honour their financial obligations or to obtain financial benefits.