02 Apr, 2014
The creation of a regional centre of excellence in financial services is being touted as the way forward if the region is to face the challenges and volatility of the global world of financial services.
This is the view of the Minister for Financial Services here, Ryan Pinder, who told delegates attending the 3rd Caribbean Conference on the International Financial Services Sector hosted jointly with The Caribbean Export Development Agency, that the Caribbean must commit to developing a platform of education and training regionally.
“We have seen fallout from the unique pressures being faced by Swiss banking institutions, we have seen the evolution of international best practices in transparency, money laundering and a movement towards tax automatic exchange initiatives. We have seen consolidation of institutions, regional realignments and public and political admonishing of products and structures utilized in our region,” he said.
According to Pinder, international financial centers, particularly those in the region, are being forced to re-assess their positions, their products and service offerings.
“In order to ensure that we as a Caribbean region advances, there is support for the position that we have to do so on a regional basis, at least in part in areas where industry is not highly competitive against each other”. He said that with the establishment of the regional center of excellence in financial services, the Caribbean will work collectively on compliance with international best practices is important to preserve regional integrity and reputation.
For his part, Prime Minister Baldwin Spencer of Antigua and Barbuda said the Caribbean must consolidate and draw from expertise to build a robust financial services sector. “It is one of the main pillars of our strategic development plan and we must navigate our challenges in order to grow and prosper.”
Spencer, who joined the meeting via teleconference, noted that the financial services sector is one of the most important platforms for the Caribbean. He said several attempts have been made by standard setting bodies to streamline the financial services sector in the region.
“However the region has shown resilience and continues to survive and is making meaningful contribution to the different economies. Some contributions primarily take the form of government revenue derived from taxes, the employment of professionals, the demand for housing and construction related activities and the demand for consumer products. The contribution varies among the countries depending on the size of the sector.”
Concerning the Foreign Accounts Tax Compliance Act (FATCA), Spencer said the OECS (Organisation of Eastern Caribbean States) sub region is approaching the requirements in a comprehensive manner “The Eastern Caribbean Central bank has established a group of technical experts within the union and formed the FATCA working group which fed information to the oversight task force and in turn to the heads of government….One major achievement of the group is the finalisation of the enabling legislation of FATCA, soon to be known a the Foreign Accounts Task Tax Compliance Act which will be debated shortly by the respective parliaments of the OECS .,” he said.
All licensed international and domestic banks have been advised to register on with the US International Revenue Service (IRS) to prevent them from being deemed non-compliant institutions.
According to Spencer, the countries in the sub region intend to signal their intention to sign a Model 1B intergovernmental agreement with the IRS.
Under FATCA, to avoid being withheld upon, foreign financial institutions may register with the IRS and agree to report certain information about their U.S. accounts, including accounts of certain foreign entities with substantial U.S. owners.
By Kathy Barrett