De-Risking

A daunting challenge faced by financial institutions in the Caribbean in recent years is the growing trend being adopted by large global banks that serve as correspondent banks to local financial institutions, to severely limit or terminate their correspondent banking relationships (CBRs) with these local or regional banks (respondent banks). This practice is considered a form of “de-risking”, whereby business relationships with clients or categories of clients considered “high-risk” are restricted or terminated. So far, financial institutions in 12 Caribbean countries have had the CBRs of at least one of their local banks terminated or “de-risked”.