The list is contained in the District of Columbia’s 2015 Budget Support Act which expands the definition of ‘tax haven’ and could be approved by the US Congress later this month. It follows one recently released by the European Union and condemned by Caricom countries.
CAB says while it fully supports efforts to combat tax evasion, the association sees the designation of Caribbean territories as ‘tax havens’ as prejudicial.
CAB said that a number of internal organisations, including the Organisation for Economic Co-operation and Development (OECD) and the Global Forum on Transparency and Exchange of Information for Tax Purposes, have confirmed that all Caricom members countries “are fully or largely compliant and have committed to Automatic Exchange of Information (AEOI)”.
It said none of the Caribbean countries listed in the new list are on the Financial Action Task Force (FATF) AML/CFT Strategic Deficiencies Lists.
“All of the Caricom territories listed in the Act have cooperated with the US Internal Revenue Service through the US Foreign Account Tax Compliant Act (FATCA) and (with the exception of one) are listed as either having a signed intergovernmental agreement or being treated as having an IGA in effect; and all CAB member banks and financial services institutions have mechanisms in place to satisfy FATCA requirements.”
CAB said that as part of its mandate, it works very closely with its members to ensure compliance, while training and other measures are satisfactorily in place with respect to regulatory, legislative and other matters of such nature.
Correspondent banking threat
“It must be highlighted that this inaccurate description of Caribbean territories has already had and could have even further-reaching effects on the Caribbean’sfinancial services sector as well as the economies. Indigenous banks in the region are currently being challenged with the threat of loss of correspondent banking relationships which are provided by international banks,” said the bank lobby.
The District of Columbia list may serve to exacerbate the perception that the region is a high-risk area and, as such, hurt the risk-rating profile of financial institutions by correspondent banks, the group argued.
Citing trade figures, CAB said the value of United States exports to Caricom countries for the periods 2011-2013 were US$16.99 billion, US$18.6 billion and US$17.9 billion, respectively; while US imports from Caricom countries for the same periods were US$9.5 billion, US$8 billion, and US$8.4 billion.
It said that these trade flows are derived mainly from key sectors such as tourism, manufacturing, agriculture, retail, ICT, among others, and “consequently, this issue impacts the very livelihood of Caribbean people”.