The Governor of the Central Bank of Barbados (CBB), Cleviston Haynes, Wednesday expressed concerned at the decision of the European Union to black list the island.
“”We are concerned about the blacklisting both because of its timing, in the middle of the (coronavirus COVID-19) pandemic while we are navigating an IMF (International Monetary Fund) programme. That is obviously a source of concern,” Haynes told a news conference as he reviewed the economic performance of the Barbados economy for the first nine months of this year.
‘We are also concerned by the rationale used for listing us. In the one case we are working with the FATF (Financial Action Task Force) to address issues that have identified in the mutual evaluation report and whether the FAFT opines that we have these deficiencies that have been addressed, my understanding is that it is not the intention of the FATF for countries to be penalised while they are working towards a solution,” he added.
Earlier this month, the 15-member Caribbean Community (CARICOM) grouping said it “deplores the ongoing unilateral, arbitrary and non-transparent blacklisting strategy” employed by the European Union (EU) on Caribbean countries.
“The most recent inclusion of CARICOM states to the blacklist of alleged non-cooperative tax jurisdictions and jurisdictions identified as being deficient in the area of Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT), underscores the EU’s unwillingness to take into account the substantial progress made by CARICOM Member States at compliance with global standards,” CARICOM said in a statement.
It said “moreover, the unquestioned use of ratings from other international bodies as a determining factor in the decision to list a jurisdiction along with the absence of meaningful prior consultation with the affected states “negates the spirit of partnership and multilateralism that has characterised the relationship between CARICOM and the EU”.
Barbados, the Bahamas and Trinidad and Tobago have been included in the latest EU list of 22 countries that have currently been identified as high-risk third countries for money laundering and terrorist financing. The list was released on October 1.
“These countries are identified as having strategic deficiencies in their national anti-money laundering and counter-financing of terrorism regimes that pose significant threats to the EU’s financial system,” the EU said in a statement, adding “you must apply enhanced due diligence (EDD) measures in any transaction or business relationship with a person established in a high-risk third country”.
Haynes told reporters the blacklisting “is a cause for concern and obviously as it relates to the more recent issue with the Global Forum, these were issues that were previously addressed and which is my understanding that we have worked over the past two years to address.
“But this is something based on ancient history and therefore it is…untimely and undeserving and I may say unwarranted.”
The Central Bank Governor said some of the issues may not be reversed before February next year and that creates issues for some of those in the international business sector.
He said certainly those operating out of Europe would be among those affected “because some of their transactions may be difficult to complete because you are now subject to enhance due diligence and in some cases institutions don’t necessarily take the time to find out more about a particular country.
“They say this country is on the list and we are not dealing with it and therefore it makes it difficult for some of these transactions to be executed and if that persists then the entity may have to decide do I really want to stay in a jurisdiction where I cannot execute my transactions”.
Haynes told reporters that this is the risk that Barbados faces with the blacklisting and “that’s why…it can undermine the overall economic strategy which we have tried to build”.
He said Barbados had been trying for more than three decades to diversify its economy from tourism “and one of the things we have tried to do over the last 30 to 35 years is to diversify that economy so that we are not sitting on one leg”.
He said having the international business services has been advantageous to Barbados, especially this year where corporation taxes were “one thing that was able to perform during this down period and that really in part due to the performance of the international business sector “
He said while overall revenue had fallen given that the island had been placed in a lockdown due to the COVID pandemic “it would have been worse but for the international business sector’ contribution to corporation taxes and therefore it would put us in a pickle if we had also suffered or did not have access to the increased corporation taxes we had during the second quarter.
‘So we are very concerned in terms of why this (blacklisting) has been done, how it has been done, but also the potential impact that it could have if it is prolonged and therefore we are working behind the scenes to try and bring this to some closure that will enable the sector to have certainty as to what the future holds,” Haynes added.