Regional banks express fears over EU blacklist

CASTRIES, St. Lucia  – Regional banks are concerned that the European Commission’s listing of Caribbean countries among the world’s worst tax havens could hurt the region’s financial services sector.

The Caribbean Association of Banks (CAB), a community of banks and other financial institutions in the Caribbean Community (CARICOM), says the list has caused it “grave concern”.

The Commission, the European Union’s executive body, released a list of 30 non-cooperative, non-EU jurisdictions – including more than a dozen from the Caribbean – that had been identified by at least 10 EU member states.

The EU subsequently sought to clarify that the list was only a compilation of members’ lists and was not a new one. However, several Caribbean countries have challenged it, saying that they did not even do business with some of those EU countries that pointed fingers at them and labelled them non-cooperative.

“Notwithstanding that the European Union has now clarified that the final decision, regarding which countries should be on the list, has not been made; it must be highlighted that the timing of this publication and its general perception as a new ‘black list’ could have far-reaching effects on the Caribbean’s financial services sector,” the CAB said in a statement.

The association pointed out that indigenous banks in the region are already being challenged with the threat of loss of correspondent banking relationships with international banks.

An additional blacklist, “based on unclear criteria, 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”, it said.

“The financial services industry cannot survive without correspondent
banking relationships and as a result, neither can our economies,” the association cautioned.

The Organisation for Economic Co-operation and Development (OECD) and the Global Forum on Transparency and Exchange of Information for Tax
Purposes have challenged the list, saying that the only agreeable assessment of countries’ cooperation is made by the Global Forum and a number of countries identified in the EU exercise are either fully or largely compliant and have committed to Automatic Exchange of Information (AEOI), sometimes even as “early adopters”.

The CAB noted that the two international bodies had confirmed that: “Eight CARICOM countries and five associated members which are named in the EU’s report, are all included in the OECD’s list of members who have committed to Automatic Exchange of Information.”

Against that background, the CAB called on the EU to carefully review the criteria used by its member states to assess and determine the countries that are non-compliant in tax matters.

Additionally, it strongly recommended greater collaboration between the EU, the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes before blacklist reports are issued.

The CAB further urged regional governments to act together to ensure that the region is represented in key decision-making processes which can impact the growth and development of the region’s economies.

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