Stocktaking exercise on ‘De-risking’ in the Caribbean region – Second Phase

Background

The XLVII CFATF Plenary, in May 2018, gave approval for a stocktaking exercise on ‘De-risking’ in the Caribbean region to be conducted. The outstanding factors to address this exercise were the perceived loss of Correspondent Banking Relationships (CBRs) that have affected the CFATF members and the barriers that this represents for the continuation of the business of Financial Institutions (FIs) and non-FIs alike. Addressing ‘De-risking’ in the Region has become especially urgent since both FIs and non-FIs have already begun to experience its negative effects, such as obstructing the development of financial systems, compromising the competitiveness of Caribbean businesses and increasing the number of persons who are excluded from accessing financial services.

The stocktaking exercise aims to better understand the ‘De-risking’ phenomenon, with the purpose of improving the performance of CFATF members at their Mutual Evaluations, as well as minimising the perception that the Region is susceptible to the abuse of their financial systems. On the other hand, the CFATF Secretariat aims to assist members in maintaining an up-to-date understanding of the FATF Standards relevant to ‘De-risking’.

Methodology

The methodology utilised for this project entailed gathering information from primary and secondary sources. Information was obtained from primary sources using questionnaires completed, by Central Banks and FIs from the CFATF membership. In the May 2018 Plenary, approval was granted for further research to be conducted with the secondary sources of information originating from official government statistics, publications and media reports.

In June 2018, two questionnaires were drafted by the CFATF Secretariat; one aimed at Central Banks and the other at FIs, with the purpose of collecting responses from the regulatory framework perspective as well as from the operational perspective of FIs.

The draft questionnaires were circulated for review by CRTMG members with the purpose of ensuring that they were drafted appropriately to capture the information needed to understand the de-risking challenges. Nine members of the CRTMG volunteered to examine the completed questionnaires and determine timelines for the analysis of the information particularized.

Once the review was concluded, the questionnaires were circulated to the Central Banks and FIs of the CFATF Membership for completion.
This report was discussed and adopted at the November 2018 CFATF Plenary meeting held in Bridgetown, Barbados and there was unanimous agreement for the continuation of a second phase of the research and for sharing the current information to feed into the FATF work on de-risking.
In January 2019, the questionnaire for FIs was re-circulated to the FIs and Central Banks from whom no responses were received in 2018. This resulted in an additional thirty-seven (37) responses being received.

With respect to the survey completed by Central Banks, there were twenty-two CFATF member respondents.