Caribbean Bankers Concerned Over New “Tax Haven List”

BRIDGETOWN, Barbados, CMC – The Caribbean Association of Banks Inc. (CAB) says it is “once more forced to express its deep concern” over yet another “tax-haven” list which includes 15 Commonwealth Caribbean countries.

The list is contained in the District of Columbia’s 2015 Budget Support Act which expands the definition of “tax haven” and could be approved by the the US Congress later this month.

The list follows one recently released by the European Union, and condemned by Caribbean Community (CARICOM) countries.

CAB says, while it ‘fully supports the District of Columbia’s efforts to combat tax evasion” it “feels that the designation of Caribbean territories as “tax havens” is prejudicial.”

CAB said that a number of internal organizations, including the Organisation for Economic Co-operation and Development (OECD) and the Global Forum on Transparency and Exchange of Information for Tax Purposes, have confirmed that all CARICOM members countries “are fully or largely compliant and have committed to Automatic Exchange of Information (AEOI)”.

It said none of the Caribbean countries listed in the new list are on the Financial Action Task Force (FATF) AML/CFT Strategic Deficiencies Lists;

“All of the CARICOM territories listed in the Act have cooperated with the US Internal Revenue Service, through the US Foreign Account Tax Compliant Act (FATCA) and (with the exception of one) are listed as either having a signed intergovernmental agreement (IGA) or being treated as having an IGA in effect; and all CAB member Banks and financial services institutions have mechanisms in place to satisfy FATCA requirements.”

The CAB said that as part of its mandate, it works very closely with its members to ensure compliance training and other measures, are satisfactorily in place with respect to regulatory, legislative and other matters of such nature.

“It must be highlighted that this inaccurate description of Caribbean territories, has already had, and could have even further-reaching effects on the Caribbean’s financial services sector, as well as the economies.

“Indigenous banks in the region are currently being challenged with the threat of loss of correspondent banking relationships, which are provided by international banks.”

The CAB said that the new District of Colombia list ”may serve to exacerbate the perception of our region, as a high risk area and consequently, negatively impact the Risk Rating profile of financial institutions by correspondent banks.

“As financial intermediaries, banks are highly dependent upon correspondent banking relationships to facilitate critical economic and financial transactions such as, remittances, foreign direct investments and international trade in goods and services.”

It said, for example, the value of United States exports to CARICOM countries for the periods 2011-2013 were US$16.99 billion, US$18.6 billion and  US$17.9 billion respectively; while US imports from CARICOM countries for the same periods were US$9.5 billion, US$8 billion, and US$8.4 billion respectively.

It said that these trade flows are derived mainly from key sectors such as tourism, manufacturing, agriculture, retail, ICT among others and “consequently, this issue impacts the very livelihood of Caribbean people.

“Accordingly, the CAB is unable to understand the justification for identifying these countries as tax havens, and has written to the District of Columbia Mayor Muriel Bowser… and key members of Congress …of both the House Appropriations Committee and the Subcommittee on Financial Services, urging them to remove the names of the Caribbean countries from this listing of “tax havens” as defined.”