Former Minister of Finance and now Hon. Leader of the Opposition Reuben T. Meade, is recommending that Hon. Premier Donaldson Romeo call an urgent meeting of the Eastern Caribbean Currency Union to deal with the looming issue of Montserrat losing its corresponding banking relationships.
Speaking on the Warren Cassell Show Friday, Meade said he has not received any information to confirm that Bank of Montserrat has been notified of losing its corresponding banking relationship with the Bank of America in 30 days as has been reported in regional media. However, rather than wait to see if it becomes a reality, the former premier said it was advisable that Montserrat initiate a conversation with the ECCU and the other indigenous banks in the OECS.
He called for a proactive approach to the situation, saying the island had several actions it could take in the interim. He suggested that the premier should stay on island and present leadership on the matter rather than attend a scheduled meeting in Brussels. “This is something that has to happen in the coming days. I wanted to hear my Minister of Finance soothing the fears of the people,” Meade said on radio. “He needs to sit here to manage the situation and keep advisors and officials at the Bank of Montserrat close at hand.”
The former chairman of the monetary council said together the indigenous banks should request for the Eastern Caribbean Central Bank to provide the necessary support to approach the corresponding banks in the US as one unit. “He should call an urgent meeting of the council which can be done by video conferencing.”
He noted that they would be stronger in numbers as if Montserrat only traded sums of 10 million it would not have the same impact as all of the indigenous banks trading more than 100 million collectively with the backing of the central bank.
The opposition leader said it was important to alleviate the fears of the corresponding banks, who are trying to avoid the potential risk of working with institutions who may expose them to fines from transgressing the anti-money laundering and anti-terrorism laws.
Business Advisor with Excellency B.V. Rochelle Monte said there are varying issues why corresponding banks are choosing to de-risk by ending relationships with Caribbean banks. Meade explained that one of these reasons is the increase in Citizen by Investment Programmes (CIP) across the region, which have been of concern to the international banks. “They don’t know where the money is coming from,” he said.
The former leader of government said another proactive approach would be for Montserrat to engage with the Crown Agents Bank, which is an entity of the UK government to provide intermediary banking services. This was a more expensive option, he noted but that it would still allow business to continue.
The opposition member said an added concern which weakens Montserrat’s position in this situation is the fact that the island has not assented to the new Banking Act. Although it has been passed by parliament, it requires the governor to sign it into law on a date designated by the government.
“This situation must be tackled now. We don’t want to wait to see if it happens,” Meade added. “Montserrat is too small to deal with it alone.”
Residents have expressed concern that this situation would hamper how they are able to collect social security and pension benefits from abroad among other things.
Losing a corresponding bank in the US affects individuals as in the following examples:
Being unable to purchase goods from overseas could affect what we can buy locally as more than 95% of what is consumed on island is from overseas.
As the US has a $10,000 limit on individual money transactions, it would also severely limit how business people can make payments to suppliers. Trying to circumvent that by using smaller amounts over a period of time would still be tracked and create more issues.
“Let’s not panic,” Meade said. “We can stop this from happening by creating the relationships are there for us to use. We have been afraid to work together now the international community is forcing us to come together.”