Invest Barbados


International Banking – Full Transparency Required


We are all familiar with the age-old adage, "The only thing constant in life is change". Nothing can be closer to the truth when describing the evolution of international banking. As various jurisdictions compete in the international financial services arena, promoting cutting-edge legislation, competitive pricing and products and services, supported by strong infrastructure (whether human capital, technology, social services, schools, housing, healthcare, etc.), the new defining element, in offering a world class jurisdiction, will be the degree of transparency and the extent and quality of regulation in the international banking sector.


In today’s world, international financial service providers, when offering an array of products and services to various client segments, must now incorporate the need for full knowledge and disclosure of ultimate beneficial owners, which goes beyond local regulatory requirements and extends to the requirements of international regulators and other stakeholders (in particular US correspondent banks), who are charged with protecting the global financial and monetary systems.


Transparency and ‘know your customer’ requirements have evolved from a mere documentation requirement at the beginning of a relationship, to a constant and ongoing range of requirements, with all stakeholders – whether client service provider, bank, regulator (local and foreign) and associated suppliers – having full knowledge of each other’s business activities. The introduction of the Foreign Account Tax Compliance Act (FATCA) by the USA, has added considerably to the assessment, monitoring, documentation and, consequently, attendant costs that all banks and financial institutions globally are now obligated to undertake. Non-compliance with FATCA brings high penalties and could also result in the loss of correspondent bank relationships. As a result, some international banks have revisited their risk appetites for new client acceptance, in striking a sensible balance between account maintenance costs and relationship value. 


Written by Christian Paul, CIBC FirstCaribbean International Bank. Source: Barbados International Finance & Business 2016


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