By Alexis R. Milan
Central Bank Governor Glenford Ysaguirre cleared the air on the de-risking actions facing the banking sector, confirming that Atlantic International Bank Limited (AIBL) still hasn’t found a new corresponding banking relation since losing its ties with Bank of America (BOA).
According to Ysaguirre, no other bank in the country has been informed that they will lose corresponding ties. Atlantic, however, has yet to replace the corresponding relationship it has lost with BOA.
Ysaguirre said that for international banks like Atlantic International, if an institution cannot secure a corresponding relationship in a reasonable period of time, that institution may have to consider whether or not it can continue to carry on business.
Ysaguirre added that the Central Bank’s role in assisting Atlantic International is to ensure that Belize’s jurisdiction meets international anti-money laundering (AML) standards. He further explained that while Belize has recently been praised for its financial legislation, each financial institution must also ensure that its regulations and standards meet those of potential corresponding banks.
He added that financial institutions are under constant review and said that while he cannot say if other banks are at risk to lose their corresponding ties, there is always the possibility.
Fortunately, he said, some banks in the country have more than one corresponding bank that they do business with, which would mitigate the negative effects of losing one.
Ysaguirre said since the situation has started affecting some institutions in Belize, the Bankers Association has started exploring the option of approaching smaller international financial institutions for growth opportunities to do business with Belize, rather than only doing business with the larger financial institutions that have become the “go-to” banks to do business with.
He said that he was not aware whether or not Belize Bank, the first financial institution to lose corresponding ties with BOA in Belize, had already established new corresponding ties. He also said that when Belize Bank lost its ties with BOA, the Central Bank never provided wire services, or nesting services, for the bank.
The Prime Minister, however, in a press conference on April 29th, following his meeting with Bank of America executives said “…it is just with the wire transfers, and the Central Bank is in a position and this has been accepted. This is one of the things I sought from Bank of America – one of the things I obtained. The Central Bank is able to do these wire transfers on behalf of any and every Belize Bank client. Nobody needs to feel that he or she has to stop doing business with the Belize Bank -absolutely not the case. No need for that, and I am here to underline that fact.”
In a separate interview with another media house, Belize Bank, following the bank’s ties being severed, CEO Lyndon Guiseppi, said that one alternative for their clients was to wire money using the Central Bank or other commercial banks.
Nesting refers to the practice among financial institutions conducting international transactions of allowing one bank to process the cross-border bank transactions of another bank through its US correspondent account. Essentially, one bank serves as the service provider and acts on behalf of its customer, another bank, to wire or transfer funds from or to the US via its account in the US.