– Citizens Bank chairman tells AGM
By Svetlana Marshall
The non-passage of the Anti-Money Laundering and Countering the Financing of Terrorism (Amendment) Bill 2013 and Guyana’s subsequent blacklisting has helped to drive up foreign exchange rates, Citizens Bank and Banks DIH Chairman Clifford Reis told the institution’s Annual General Meeting on Tuesday at the Georgetown Club.
He also said that new and innovative models are required in the financial and banking sectors to combat the negative effects of the 2008 economic crisis that continue to manifest themselves.
In 2013, the global economy grew more slowly than expected, recording a 2.5 percent increase, as the recovery from the Great Recession of 2008 remains fragile, owing to the continued recession in many European countries and the slowdown in emerging market economies, particularly Brazil and China.
Reis told shareholders at the bank’s 19th AGM that the economic meltdown continues to take a toll on the banking sector, even as regulators attempt to cushion the impacts and implement various systems to prevent a reoccurrence.
For Guyana, this situation is compounded by the fact that the nation is currently on the regional blacklist for inadequate money laundering legislation. After months of warnings, warring and missed deadlines, legislators are yet to reach consensus on the Anti-Money Laundering and Countering the Financing of Terrorism (Amendment) Bill 2013. In late December, the bill was deferred to a special select committee for a second time. The country faces further sanctions from the Caribbean Financial Action Task Force (CFATF) and the Financial Action Task Force (FATF) in February and May respectively if the legislation is not passed in the National Assembly by that time.
Far-reaching implications
“The Anti-Money Laundering and the Countering Financing Terrorism Bill, this enactment is certainly not restricted to the confines of the banking system in Guyana, but has far-reaching implications and consequences for everyone globally regarding non-compliance,” the Banks DIH chairman said.
He further opined that the legislation will reshape the manner in which the banking and financial sectors conduct business. Guyana’s failure to pass the legislation, coupled with the domino effects from the economic meltdown, has influenced the upward movement of the exchange rates, he added.
According to him, the new economic challenges may push governments to adopt more protectionist approaches to safeguard their financial and banking sectors. However, this will affect the global banking industry’s ability to exercise that required flexibility to enter new markets and sustain their operations in others.
Overall, Guyana’s banking system remains sound and stable, with commercial banks yielding higher levels of profits and capital, Reis stated. The capital adequacy ratio remains well above the prudential benchmark of 8.0 percent.
Notably, the Bank of Guyana continues to capitalise on the auction of treasury bills as a monetary tool to mop up the excess liquidity in the sector. At the end of the financial year, Gy$84.9 billion in treasury bills were outstanding with commercial banks holding Gy$73.8 billion or 86.9 percent.
