Home' Trinidad and Tobago Guardian : February 23rd 2017 Contents FEBRUARY 23 • 2017 guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG21
From Page 20
In this regard, every Caribbean country is
compliant with the rules of the Financial Ac-
tion Task Force (FATF) on money laundering
and counter terrorism financing.
They are also subject to regular reviews.
In fact, they are more compliant than the US,
which the FATF found to be non-compliant
with "entity transparency" and "gatekeeper
rules" in 2006, and which the FATF has chosen
not to evaluate since.
And, as far as the OECD Global Forum rules
on Transparency and Exchange of Information
for Tax Purposes are concerned, the majority
of Caribbean countries are on their way to full
Notably, my own small country, Antigua and
Barbuda, is fully compliant with the require-
ment for Common Reporting Standards (CRS),
while the US has not signed-up to it.
And the US has been the beneficiary as Trust
structures move there to avoid disclosure.
States in the United States, such as Delaware,
South Dakota, Wisconsin, Colorado and Ari-
zona, disregard OECD rules -- and are practical
tax havens, demonstrating why the US has not
signed-up to the CRS.
But, it is clear that the doctrine of 'might is
right' continues; the principle of transparency
applies only to the weak; and the notion of a
level playing field for competition is a myth.
US NOT ENFORCING
TIEA's IN THE US
Incidentally, it is worth pointing out that,
in 2015, a number of individual States of the
US adopted legislation naming Caribbean
countries, including my own, as 'tax havens'
When, as Ambassador of my country to
the US, I pointed out to the Commissioner of
the US Inland Revenue Service that under the
Tax Information Exchange Agreement (TIEA)
which my country signed with the US in 2000,
the US---and all its States---had access to auto-
matic tax information and, therefore, the leg-
islation adopted by Maine, Montana, Oregon
and the District of Columbia was ill-informed
and wrong, and that he should so advise them,
the reply I received in writing was that "the
IRS plays no role in the legislative process"
of these States.
Nothing was done.
It makes one wonder what is the point of
a TIEA with the Federal Government of the
US, and whether, instead, we should have ne-
gotiated individually with all 50 States of the
What is clear is that, though the IRS won't
enforce the terms of the TIEA with its own
States, it demands enforcement, upon pain of
penalties, by Caribbean countries.
Added to all this, over the last two years,
Caribbean countries have been facing a huge
new threat not only to their financial services,
but to their sustainable development and their
ability to participate in the global financial and
LOOKING TO TRUMP
It would be helpful if, committed as it says
it is to less regulation, the Donald Trump gov-
ernment will be more open to the Caribbean's
argument that US regulators and correspond-
ent banks should mitigate rather than avoid
risk, and that, therefore, US banks should
only terminate correspondent banking rela-
tions where money laundering and terrorism
financing risks cannot be mitigated.
But that is a mere hope; it is not an expec-
Nonetheless, it is a proposition that Carib-
bean countries collectively should explore with
the Trump administration as soon as they are
able to do so at all levels.
So, what the future holds for correspond-
ent banking relations for the Caribbean is very
What is clear is that if the present trends
continue, the region will be in danger of los-
ing even more sovereignty over its fiscal and
If the indigenous onshore banks and off-
shore banks of the Caribbean are all deprived
of correspondent banking relations, the region
will be left with only the foreign-owned banks
(mainly Canadian) that may be prepared to re-
main because they have their own headquarters
A NEW COLONIALISM
But those banks can then form cartels that
control the means of exchange in the Caribbean
and determine interest rates, lending policies,
and sectoral investment.
The region will be gripped by a new form of
colonialism and control; this time by foreign
A responsible international community
should help the Caribbean to resist this grow-
ing cancer; other developing countries should
be in the forefront of support, for the cancer
can spread to them, as it has already started
in Central America, including Panama, and
Incidentally, nothing that I have said here
should imply or suggest that Caribbean coun-
tries ought not to comply with the rules against
money laundering, counter terrorism financing
and tax evasion that are being set; albeit not
by globally-represented bodies.
They have to do so, and are doing so, at very
For instance, in my own country, here is a
list of the obligations that we have to finance:
• The FATF’s rules on anti-money launder-
ing and counter terrorism financing;
• The OECD’s common reporting standards;
• The US FATCA
• Operation of Tax Information Exchange
Agreements with over 25 countries;
• Operation of Mutual Legal Assistance
Treaties with almost 90 countries.
In the case of the US FATCA, small countries
in the Caribbean are paying for the dubious
privilege of being policemen for the US Inland
And, incidentally, the US has only promised
to provide reciprocal information; it has not
done so and shows no sign of doing so.
But Caribbean nations---and all other affect-
ed countries---should strengthen their advo-
cacy worldwide, enhance such representation
as they have in the OECD Global Forum and
at the FATF, and demand that every OECD
country implements the same rules they im-
pose on others.
So, to summarise the themes of this pres-
In relation to globalisation, the only global
rules are those set by powerful countries in
their own interest.
Fiscal sovereignty as a right of individual
States is largely ignored and up-ended by the
doctrine of might is right.
Tax competition has survived in part so far;
but the OECD countries are unrelenting in their
efforts to coerce other nations into mirroring
the areas of their taxation, even though the
economic imperatives of nations are vastly
WHAT SHOULD CARIBBEAN
What then for the future of financial services
in the Caribbean?
The prospects would be best served by the
formation of alliances in every global forum to
wrest control of financial services matters from
the OECD which represents only a handful of
nations in the world community.
In the late 1990s, it was an alliance of Car-
ibbean nations with Austria, Switzerland,
Luxembourg, the Isle of Man and Jersey, that
held back the OECD over its so-called "harm-
ful tax competition initiative"; and it was the
decisive intervention of the new Republican
government of George W Bush, before 9/11
and the Patriot Act, that eventually pushed
back the OECD.
But, since then, the European jurisdictions
retreated into the fold of the OECD, and the
Obama administration in the US strengthened
the heavy-hand of regulation and extra-ter-
ritorial laws such as FATCA.
The Caribbean should now look elsewhere---
to the countries of South and Central America,
including Panama, and to Africa and the Pa-
cific where nations are also subject to coer-
cion, erosion of fiscal sovereignty and loss of
competitiveness---to build alliances to counter
the domination of global rules on tax matters
by a few self-serving nations.
A TRULY REPRESENTATIVE
WORLD BODY NEEDED
The Ecuadorian government is right; a UN
body is needed.
But not to chase after imaginary windmills
of falsely-labelled tax havens.
It is needed to create standards created by
representatives of the entire world and not by
a handful of elite countries; it is needed to es-
tablish rules that tax competition, like all other
competition, is good for global growth; it is
needed to enshrine the principle that setting
levels of taxation is the sovereign right of each
nation in the context of its own economic and
Alliances should also be sought with groups
within OECD countries that recognise that
high taxation and coercion of other nations
do not make for a prosperous world or a peace-
That, to paraphrase Abraham Lincoln, the
world will not survive half-free, and half-en-
There would be good reason for other de-
veloping nations and groups within OECD
countries to join the Caribbean in such an
For, the small are the bully's first victim; they
are seldom the last.
Look to Latam, Africa, Pacific
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