At risk

Tax experts say tourism will pay if de-risking is ignored

The Freundel Stuart administration is being warned not to ignore the vexing issue of de-risking even as it struggles to address the country’s worsening economic conditions.

The warning has from overseas tax compliance experts, who cautioned that if the issues relating to de-risking were put on the back-burner, the country’s bread and butter tourism industry, as well as other sectors, could pay dearly.

De-risking is the term used for the termination or restriction of business relations, or the severing of correspondent banking relations to avert risks of money laundering and terrorist financing.

Up to June of this year the Central Bank of Barbados had given the assurance that the concerns regarding de-risking were being addressed at the highest level among regional states and the international community.

Economist Jeremy Stephen said over the past few months it seemed Barbados had become relaxed in tackling the threats and issues relating to de-risking and the Foreign Accounts Tax Compliance Act (FATCA), in order to focus more on issues relating to public financing.

“I think that we took our eyes off the ball with respect to de-risking. It is as if it is not even a big threat anymore and people have just put it in the back and we are focusing on the fiscal issue that Government has,” Stephen said.

Speaking to the media today, ahead of a seminar to be held here next week on matters relating to FATCA, Common Reporting Standard (CRS) and de-risking, President and Chief Executive Officer of Foodman CPAs & Advisors Stanley Foodman said if Barbados failed to save its institutions from de-risking sectors of the economy could be “severely impacted”.

“It is an issue that can permeate and affect every sector of the Barbados economy and I think it is important to keep that in mind that it is probably the most unforeseen dangerous financial issue that has crept up behind FATCA,” Foodman said.

“With respect to de-risking the impact on the local economy is for example, if you are not self sufficient with food supply you might have trouble bringing in food supplies. If you import your medicines and medical supplies that can be impacted and tourism in and of itself,” he said.

The compliance and risk management specialist explained that jurisdictions that have already lost their entire correspondent banking relations were now reeling from the effects.

“De-risking is negatively affecting the Caribbean in a way that we haven’t seen since the ramification of the Caribbean Basin Initiative. It has become a terrible problem for economies in the Caribbean. It has caused loss of jobs, it has caused a loss of food supply in some places and of course it is affecting the tourism industry.

“If for example, I were to go to Barbados and I wanted to use a credit card in Barbados and the banking system in Barbados was de-risked then I couldn’t use my credit card in Barbados, which is a throwback to the days when I would have to travel with travellers cheques and cash, which also creates the spectra of potential increases in street crimes and other issues affecting the local economy and the local cultures and countries,” he added.

Foodman said if institutions were de-risked, a part of the solution was to find “second tier banks” to provide the necessary correspondent banking services.

“The solution is a bifurcated solution that comes together. The first is to make sure that Barbados is completely FATCA compliant from top to bottom. That is an absolute. Also to make sure that Barbados is CRS compliant,” he said.

FATCA, passed by the US Congress in 2010, requires foreign financial institutions to report to the US tax office, the Inland Revenue Service, information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.

President of the anti-money laundering consultancy firm ComplianceAid Michelle Martin said even if local banking institutions were de-risked the country should still ensure it was up to date on a number of tax compliance matters.

“If entities de-risk then they are looking for the second tier and to even go back to the first tier they have to have the house in order. If the house is not in order they are not going to be looked at. Obviously you are going to need a strong AML (anti-money laundering) programme in place where your policies and procedures are not just written but they are tailored to your industry and then to your specific institution,” Martin said.

She also warned of the need to have a qualified and capable compliance officer in place, and that requirements under the local tax compliance law were followed, including annual training, audit, risk assessment and controls.

14 Responses to At risk

  1. Kaiser Sose
    Kaiser Sose August 30, 2017 at 11:07 pm

    I thought you all called him I’m too busy having lunch to visit St Peter lemme send the I let criminals run the country unchecked Attorney General.
    If you all vote these bums back in BIM its gonna be calamitous.

  2. Anfaani Henry
    Anfaani Henry August 31, 2017 at 12:58 am

    Elections please

  3. Tony Webster August 31, 2017 at 5:37 am

    When months and months ago, I heard our official policy statement on this new spectre, which really is an existential threat…our jugular… of any bank now functioning as “a licensed dealer in foreign currencies”…being able to continue to receive, or to send ANY F/X into, or out of a “de-risked” Caribbean country, my heart sank: we would set up a committee to prepare a “common CARICOM front”. Well, Sir, effin dat ent got no green shoots, then shutes… for God’s sake…cut a deal for this little rock…quietly and separately…even if some noses get a li’l brown.

    Will our real Central bankers, and diplomats, (he, she, or any of DEM) ….please stand up?

  4. Valerie Knight
    Valerie Knight August 31, 2017 at 6:09 am

    Are these two suggesting that people should use travellers cheques or cash rather than credit cards when going abroad. Barbados is rated as having a good anti money laundering system so what are these two so called economists talking about.

    • Kaiser Sose
      Kaiser Sose August 31, 2017 at 7:04 am

      The TREASURY DEPT IN THE USA put BIM on the money laundering list FACT

  5. Patricia Toppin
    Patricia Toppin August 31, 2017 at 6:57 am

    You don’t have to agree or even like a person but to get personal and insulting is childish. How can one blame the youth when the said youth are reading these pages and seeing the disrespect coming from the adults.

    • Kaiser Sose
      Kaiser Sose August 31, 2017 at 7:31 am

      PATRICIA TOPPIN: first off ma’am he has disrespected the country and made it a a haven for gunmen drugs and all other forms of fukry.
      Its under his stewardship along with BUMBLE STEWART that crime has exploded, because he refuses to give these cretins long mandatory sentences and bring back the death penalty he /them have failed to come up with an anti gang unit to stem the flow of illegal weapons and drugs.= Complicity
      So the morass that has affixed itself to Barbados ma’am is a direct result of their making.

      The word conspirators/collaborators should be their scarlet letter to be worn by them.
      And you and others that make excuses and give these sycophants amnesty are complicit in the mayhem that abounds our wonderful island.
      People are afraid to enjoy them selves for fear of being shot by this rabble.
      The DLP and its acolytes are a pox, on the island that should be lanced and drained like a swamp.

      Leadership is admitting wrong and implement solutions to counteract the conundrum not makes excuses and blame others by whining like a jilted school girl, “apologies ladies” for your failings, this government is comprised of a multitude of hapless amateurs parading as a governmental body.
      So when people express themselves via curse words or venting its due to the frustration caused by inaction and incompetence, So if our modus oparndi offends your delicate sensibilities oh well! Tell that to the murdered and maimed individuals surviving family members directly affected by the cause and effect of murder and woundings.

      I have lost loved ones to gun violence and it weighs you down like an anvil on your proverbial back.
      BARBADOS has a choice soon in the elections a simple one to be real . To move in the direction of the BLP and vote these wazzock DLP do nothings who only continue to bloviate and offer bellicose bravado but watch as the island continues to be inundated with gun play.
      Sincerely a disrespectful Bajan.

  6. Ibukunoluwa Ayanfe Ozioma
    Ibukunoluwa Ayanfe Ozioma August 31, 2017 at 7:06 am

    Wow, what a palava!! So instead of facilitating the ease of business and other transactions, the SWIFT system has made it possible for illegal activities to take place? Hmm… No doubt intended that way. Well, what do we expect when a mafioso outfit is in charge of the global economic/monetary system?

  7. milli watt August 31, 2017 at 9:46 am

    this sounds like the money form of global warming………there is something wrong but you don’t know what is causing it. I agree with TRUMP it’s a hoax and I will do nothing. I agree with STEWART ALSO.

  8. David Hall August 31, 2017 at 12:04 pm

    I am lost as to why the current administration insists on continuing on in office when it seems certain that its leaders are completely-out of their dept.

  9. Sheron Inniss August 31, 2017 at 12:37 pm

    We gave up our rights when the National Bank was sold for a mess of pottage. Take a read of Alternative News and you will see who really owns the Central Banks in most parts of the world. Truth is stranger than fiction. That is why places like China can’t be touched as they are not owned by that American family.

  10. jrsmith August 31, 2017 at 4:12 pm

    I keep saying our politicians in barbados is out of control, we need something to be put in place or else we are doomed….. they seems set in they ways to destroy barbados, they are standing in the way of progress……………………How could a government stay in office , after 9 years and cannot account for 900 millions bds dollars as the published report by the (Audit General) and everything seems quiet on the western front , no one raises an eye lid ………..
    I use to think when certain world institutions keeping barbados in the lime light ,that they are having a go at us , but we dont know what certain people keep getting up to in barbados…

  11. Tony Webster August 31, 2017 at 6:16 pm

    @Kaiser Sose: touche! Hmmm…remind me what we spent $40+ M celebrating last year? If we had changed the government thereafter, I might have considered it worthwhile, but we yet have two immense events/ tasks ahead of us: first, elections; then the REAL work of putting this country back together again.Worth a little introspection… and a LOT of prayers.


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