“General International Business Financial Sector Issues and Policies”
A day-long seminar for the International Business Financial Sector (IBFS)
By Mohammed Patel, President, BIBA
LLOYD ERSKINE SANDIFORD CENTRE
MARCH 17, 2011
Governor of the Central Bank of Barbados Dr. DeLisle Worrell, fellow participants, other specially invited guests, members of the media, good morning and welcome to this special forum on “General International Business Financial Sector Issues and Policies”. As President of the Barbados International Business Association, I am heartened that the Central Bank of Barbados has taken the initiative to convene a seminar of this quality at such a critical juncture in the evolution of the global financial system. As all of us involved in the financial services sector would be aware, the far-reaching global financial crisis spawned a cascading response from international financial authorities that has led to rapid changes in legislation and regulations applicable to our sector. Of particular concern has been the targeting (some might say “scapegoating”) of International financial centres such as Barbados for increased regulatory oversight following the financial crisis. A number of international regulatory changes are being driven by the Basel-based Financial Stability Board (FSB) at the behest of the G-20, therefore I am pleased to see that today’s programme includes a session on engaging with the FSB.
Given the recent attempts by the Organisation for Economic Cooperation and Development (OECD) to reassert its relevance, it is also very timely for the Central Bank to have included a session on the threats and opportunities facing our tax treaty network. While Barbados has so far failed to ‘play the game’ by having only one tax information exchange agreement (TIEA) in contrast to say the Cayman Island’s 30, or the British Virgin Island’s 27, this is simply because we are in the business of providing quality not quantity. As Ben will no doubt address in his presentation on the topic, double tax agreements provide international investors with more certainty, protection and effective business facilitation than a simple TIEA provides. BIBA therefore continues to support the government’s position that when this country invests its time and resources in negotiating a tax agreement with a foreign jurisdiction, it should be an agreement that is robust, meaningful and one that does not negatively impact on our tax sovereignty.
However, while Barbados is a sovereign country, it is also a signatory to a number of international conventions and agreements that carry with it certain obligations to which Barbados must adhere, including its contribution to the fight against money laundering. This is why it is a step in the right direction for today’s programme to also include a session on improving our anti-money laundering framework. For international financial service companies, international reputation is paramount and our reputation depends heavily on the regulatory environment in which we operate. Barbados, and particularly the Central Bank, has been widely recognised for providing solid regulatory oversight of the international banking sector and it is important that our compliance regime continues to live up to the standards that we have set ourselves. Barbados has international banks operating here managing billions of dollars in assets. If this jurisdiction is to maintain its attractiveness to these financial institutions, and attract even more to our shores, the management behind these institutions must have the confidence that they can operate here without challenge from their regulators at home.
The recent passage of the Money Laundering and Terrorism Financing Bill through the House of Assembly signals that Barbados takes its international commitments to cooperating in the anti-money laundering and anti-terrorism fight seriously
BIBA however does have some concerns in relation to certain aspects of the legislation, which could seriously undermine this country's ability to attract and retain wholesome, lucrative business originating from beyond our shores. At this stage the legislation seems to offer major operational challenges for both domestic and international businesses. As it stands, certain aspects of the legislation could have significant adverse ramifications for non-financial institutions treated as financial institutions for the purpose of the legislation, as well as for certain captive insurers and reinsurers.
We have identified these concerns in a formal letter to government and we look forward to there still being an opportunity to have these concerns addressed before they take effect in a manner that will harm Barbados’ competitiveness.
Also, I cannot let this opportunity pass without further encouraging the authorities to forge ahead with gaining Barbados a seat on the Financial Action Task Force (FATF). This would definitely benefit International Financial Institutions operating in Barbados.
There is much more that I can say on the topic of the issues and policies facing our international financial sector, but I will leave that to the more eminent speakers on the programme today. Suffice it to say, I believe today’s workshop is both timely and necessary and I look forward to the discussions that will arise out of today’s presentations. Please be mindful that this is our opportunity to share with the decision-makers our experiences and perspectives in order to assist them in determining how best to position Barbados to respond to the challenges and opportunities that lie ahead. I encourage you to be frank and open in your contributions today so that we can all leave here knowing that we have provided those in authority with the depth of knowledge needed for them to take this sector and Barbados forward.
Ladies and Gentlemen Welcome.