Q. We have been hearing much about black lists and grey lists. What is the significance of these lists and how do they impact our business community?
A: Business communities are being impacted by the Financial Action Task Force (FATF), which is the global standard-setting body for combatting money laundering and terrorism. The work of the FATF includes monitoring the application of standards at national levels to combat and control money laundering.
Jurisdictions that have not applied the standards well are listed as high-risk jurisdictions which means that they have strategic deficiencies in the application of standards to combat and control money laundering, terrorist financing, and financing of proliferation.
High-risk jurisdictions are further broken down into two categories – the Black List and the Grey List. These lists are significant because they determine the way international businesses will conduct transactions with you – that is, with added discomfort and sometimes grave skepticism. Or simply, jurisdictions will not do business with you at all, because of the implications for their business, should something go wrong (this is known as de-risking).
Q. What is Barbados’ national risk rating and why does this matter?
A. Barbados is on a Grey List. The Black List contains jurisdictions assessed as having the most serious deficiencies in the application of standards. Countries across the globe are urged to take countermeasures against such jurisdictions.
Jurisdictions on the Grey List have deficiencies rated as serious but not as serious as the deficiencies of the jurisdictions on the Black List. Jurisdictions on the Grey List are under increased monitoring by the FATF, and such jurisdictions have committed to swiftly resolving the identified strategic deficiencies within the agreed-to timeframes.
Barbados being on the Grey List matters because jurisdictions may still conduct country risk assessments on individuals and transactions from Barbados at a higher-than-average risk level, which could mean added skepticism in transactions conducted from Barbados or nationals of Barbados.
The Grey List also matters because Barbados has committed to swiftly resolving identified strategic deficiencies within agreed timeframes. Again, the operative words are ‘swiftly’ and ‘agreed to timeframes’. So, if you have been wondering why Regulators have been giving Barbadian financial institutions such taut timelines to get up to standard, have a look at the FATF’s requirements.
Q: What is the role of Compliance Officers in ensuring that Barbados remains a top-shelf jurisdiction for financial services?
A: Compliance Officers need to lead with purpose. Their role is to help their financial institutions accomplish ‘effective’ compliance and strike the balance between effective compliance and the ease of doing business. Far from being a hindrance to business, ‘effective’ compliance can be the driving force for business by creating a competitive edge in the market in this way.
Compliance Officers need to be busy fostering mindsets towards compliance as being essential to ensuring Barbados is and remains a top-shelf jurisdiction for financial services.
Q. Some financial entities perceive regulatory actions as punitive and heavy-handed. Is there a case for such a view?
A. The regulatory actions may appear punitive and heavy-handed to financial institutions because they impact the institutions’ main goal, which is to drive business. Financial institutions feel overwhelmed by regulatory interventions. That is true.
Perhaps, the adage ‘prevention is better than cure’ could help to ease the minds of business executives. One corporate scandal is far too many. The objective is to put businesses on a path to sustainable business growth and development. Regulatory intervention is part of the process of accomplishing that sustainable growth.
If businesses continue to see compliance and business as two separate issues, then the perception that regulatory actions are punitive, heavy-handed and so unnecessary will continue. On the other hand, if businesses see compliance as a part of a business or simply ‘as the business’, then the idea that regulatory intervention is punitive and heavy-handed may eventually dissipate because ‘effective compliance’ is seen as a fundamental part of ‘effective business’.
For those businesses determined not to comply, then Regulators may have no choice but to take the most extreme measures against them because what is at stake for the society is far greater. In those cases, certainly, regulatory intervention should not be seen as punitive and heavy-handed.
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