NEW PILOT ALTERNATIVE PAYMENT AND SETTLEMENT SYSTEM OF FOUR CARIBBEAN CENTRAL BANKS ANNOUNCED, AVOIDING THE ROUTING OF CBI MONEY THROUGH THE U.S. BANKING SYSTEM

TIMOTHY ANTOINE, the Governor of the EASTERN CARIBBEAN CENTRAL BANK, has announced the formation of a pilot program whereby the central banks of three Caribbean countries, and the ECCB, will form a cross-border payments and settlement system, based upon the model of the existing Pan-African Payments & Settlement system, to handle cross-border payments in local currencies. Antoine bluntly stated that the purpose of the new payments system is to avoid the use of U.S. correspondent banks and what he referred to as "foreign currencies," meaning the U.S. Dollar. The new system has been designated the CARICOM PAYMENT AND SETTLEMENT SYSTEM (CAPSS).

The proposed system, which was announced at the recent Africaribbean Trade and Investment Forum in Grenada, and which Antoine contemplates being eventually being linked to the African payments system, with central banks making settlements directly with each other, in USD, could result in payments for economic citizenships through Citizenship by Investment (CBI/CIP) programs, outside of the American financial structure. This means evading AML/CFT compliance at U.S. Correspondent banks, which adhere to Banking Best Practices policies and procedures; Payments would therefore not be traceable through the American banking system.

Given the long history of fraud, money laundering and corruption that has pervaded the CBI programs of the five EC states, St. Kitts & Nevis, Antigua, Dominica, St. Lucia and Grenada, whose compliance programs are known to be affected by local political actors, and other forces, rendering them intentionally ineffective, it is feared that this new political system will serve as an end run around the American financial structure for illicit funds being laundered through CBI investments.

We further fear multiple problems, coming from the region's primitive payments and payments processing sector, which is a complex ecosystem involving various players like banks, payment processors, fintech companies, and digital wallet providers, all required to be working together to enable seamless transactions. This industry is rapidly evolving with technological advancements, changing consumer expectations, and increasing regulatory scrutiny. The Caribbean's Payments industry, to properly discharge a cross-border function, will require major upgrades, professional advice, and extensive training of staff.

Whether it is the intent of Governor Antoine, and the other organizers, to evade American regulators, remember that serious financial crimes in the U.S. through CBI transactions have already occurred, and the offenders will have to account for those criminal violations, as this proposed plan won't immunize them, such a program will demand compliance at a seriously increased level to become successful.