Barbados prime minister takes aim at international anti-money laundering regime

Prime Minister of Barbados MIa Mottley speaks during the Caribbean Financial Access Roundtable on April 20, 2022.

Barbados Prime Minister Mia Mottley has criticized the international anti-money laundering regime as being disproportionate for small developing countries given the low risk they pose compared to the larger developed countries where most money laundering.

Speaking at the Caribbean Financial Access Roundtable in Barbados on Wednesday, Mottley addressed a delegation of members of the United States Congressional Financial Services Committee, heads of state and government of CARICOM, as well as senior North American banking executives.

Mottley said Caribbean leaders were “adamant” in their support for international efforts to stop crime, terrorism and its financing.

But she said Caribbean governments have always stressed there should be a risk-based approach, rather than a one-size-fits-all approach that would impose prohibitive burdens on small nations.

She noted that the current AML/CFT system was so “transparently flawed”, that it “ended up being counterproductive, inadvertently supporting crime”.

The Prime Minister of Barbados has said that countries that are on the anti-money laundering lists published by the Financial Action Task Force, the OECD or the European Union generally have very little international financial activity of any kind. it would be.

Rich countries “never listed”

Yet the wealthy, developed countries where most international finance and money laundering takes place “have never been listed and never will be.

Criminals could simply follow those not on the list and choose the path of least resistance.

“We know that transactions are routed through Sydney, to London, Dublin, Toronto, to other countries in Europe, through New York and through some of the states unfortunately in [the US], as well. We do not intend for these centers to be sanctioned, nor do they face the spectacle of enhanced due diligence,” she said. “The sanctioned countries are Haiti, Nauru, South Sudan, Senegal, Uganda, Jamaica, Barbados, Bahamas. I can go on.”

All of these countries were asked to apply the same level of regulation as large countries that have this ability to distort global systems, which led to an erroneous and discriminatory result.

Mottley pointed to weak beneficial ownership rules in the US and UK as critical to money laundering.

“Yet we need to restructure our laws and processes to ensure that all beneficial owners are disclosed to everyone.”

Barbados is, like the Cayman Islands, on the FATF list of jurisdictions under enhanced scrutiny due to perceived weaknesses in their anti-money laundering regimes.

Financial exclusion and risk reduction

The effect of listing, said the Prime Minister of Barbados, is financial exclusion, because for banks the cost of enhanced due diligence is too high compared to the relative profitability of doing business with small developing countries.

And the shrinking banking footprint and decline of correspondent banking in the region is having a detrimental effect on trade, commerce and economic growth.

The current system makes it too easy for money launderers, Mottley suggested. “And if we doubted how easy it was for them, we just have to follow the trail of confiscations that are taking place around the world, as a result of the war in Ukraine, and where properties are being confiscated , where yachts are confiscated.”

Maxine Waters, chair of the U.S. House Committee on Financial Services, said that for years she had engaged with financial institutions, U.S. agencies, multilateral development institutions and leaders. of affected countries to address the issue of risk reduction. It is the tendency of banks to end or restrict business relationships with certain customers or countries to avoid, rather than manage, risk.

“There have been improvements, especially as many Caribbean countries have adopted significant financial crime compliance measures,” Waters said. “Yet, despite these good faith reform efforts, many Caribbean countries continue to face significant challenges in accessing financial services.”

The financial services committee chair said the complex problem could not be solved by the US Congress alone, but would require “bold and cooperative action by all stakeholders” to reverse the damage wrought by decades of risk reduction and deterioration of financial access.

Cayman Islands Prime Minister Wayne Panton participated in the roundtable on Risk Reduction and Correspondent Banking; the scope and impact of European Union listing initiatives; and actions to address evolving international standards against money laundering and the financing of terrorism.

“As a leading global financial services center with extensive experience in handling financial services issues, it is important that the Cayman Islands be an integral part of these discussions with U.S. officials and heads of CARICOM,” Panton said in a press release.

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