T&T debates tax amendment as de-risking hits local banks

Trinidad and Tobago's (T&T) attorney general, Faris Al-Rawi, has spoken out against the de-risking of correspondent banks, saying the process was inflicting a slow and painful "death by a thousand cuts" on the local banking sector.

The comments, reported in local media outlet Newsday, come as the government and opposition lawmakers debate the passage of a key amendment to the tax code that would allow law enforcement and banks to have access to personal information for financial reporting purposes.

"We are already being de-risked. Corresponding relationships are already in jeopardy. Don't ask me, ask (the Bankers' Association, or BATT) and they will tell you their corresponding (foreign partners) banks have already started applying enhanced due diligence mechanisms (or else) some banks have already said they are not doing business," Al-Rawi told reporters after an event in Port of Spain.

The international banks that are undertaking the de-risking will slowly close ranks until T&T becomes "unbankable," he said.

UK and US banks have already begun to apply due diligence in accordance to the standards put forward by the OECD's Global Forum on Transparency and Exchange of Information for tax purposes and the Financial Action Task Force (FATF), Al-Rawi added.

Both of these international agreements, of which TT is a signatory, seek to strengthen international co-operation on combatting money laundering, fraud, tax evasion and terrorist financing. TT, the government has said, has until the end of November to pass the income tax amendments or start facing consequences.

The amendment echoes a similar measure passed for compliance to the Foreign Account Tax Compliance Act (FATCA), a US government tax regulation, which the opposition, only after much debate, decided to support, according to Newsday.

Among the requirements of the bill are stringent reporting on financial and personal information, drawing privacy concerns from the opposition.

Deepening problem

A 2017 study by Oxford Business Group on T&T, said that changes in the approach to global banking regulations, together with increased risk-aversion, have had an important and largely unintended impact on the regional and local economic environment.

"The Caribbean, in particular, has been affected negatively by this "de-risking" trend among international banks, some of which have been ending their correspondent banking relationships with smaller local institutions," the study said.

Multiple territories in the Caribbean have struggled to change regulations and update legislation this year after 17 of them, including Panama, T&T and Barbados, were placed on the EU blacklist of non-cooperative tax havens in December 2017.

While some of these, like Panama, were removed quickly, others like T&T continue to push through difficult reforms like the amendment to the income tax act.

UK offers Jamaica assurances

On Friday, the UK high commissioner to Jamaica, Asif Ahmad, said the UK would ensure that the Commonwealth realm is not be deprived of access to financial assistance due to de-risking, as reported in local news outlet Loop Jamaica.

"We, as host of one of the biggest financial centers in London and elsewhere in the UK, want to make sure that countries like Jamaica are not somehow disenfranchised just because the world is taking a different view of risk and of how money moves," Ahmad argued at an event in Montego Bay, adding that the UK was working very closely with the Jamaican government and local financial institutions.

Pictured: A cruise liner in Port of Spain, Trinidad and Tobago.