Thursday, March 16, 2017


 Indigenous financial institutions, located in the Caribbean region, continue to battle to retain their correspondent relationships in the developed world. In addition to the terminations that are inflicted upon them from the United States, banks in the countries of the European Union are also ending correspondent accounts, some of them being longtime relationships. This was recently noted in an article quoting staff at the East Caribbean Central Bank.

Other financial institutions have chosen to increase, even resorting to doubling, the costs of maintaining those correspondent relationships, in what may not be an attempt to recover increased compliance costs, but efforts to turn correspondents into mini profit centers. Caribbean banks, in general, can ill afford doubled transaction costs, nor can most of their clients.

Those few plucky US banks actively seeking to initiate new Caribbean partners are hard to find, and their active solicitation roles often mask basic needs; to possibly increase capital, develop new profitable markets, to offset prior losses, or to establish niche markets in a high-risk specialty. They may later experience fatal problems, or be sold off at a loss, stranding the correspondent banks who threw their lot in with them, not seeing the risks involved; They are to be avoided.

Therefore, with Caribbean banks coming to regard correspondent relationships as an endangered species, and unable to raise their compliance standards to a level which would provide total comfort for their US correspondents, the only acceptable solution is to present such an effective KYCC package which will completely satisfy any major American bank.

Caribbean banks that want to survive the de-risking phenomenon, and even expand their correspondents, must give them the same level of KYC that the US banks have with their own depositors. when KYCC in the correspondent equals the amount of KYC in the mainland bank, the problem is solved, permanently.

if you have missed our other articles on the subject of KYCC, email me at:
 miamicompliance  and I will send you the links to those articles.

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