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Commentary: How Caribbean banks can keep their US correspondents by utilizing KYCC technology
Published on February 18, 2017 Email To Friend    Print Version

By Kenneth Rijock

The potential loss of correspondent banking accounts in the United States is dominating conversations among Caribbean bankers recently, especially since a number of American financial institutions have terminated many of those longtime relationships. It is perhaps the most pressing problem bankers in that region face. Is there a viable solution? Yes, there is.

Kenneth Rijock is a banking lawyer, turned career money launderer for ten years, turned compliance officer specialising in enhanced due diligence, and a financial crime consultant. His autobiography “The Laundry Man” was published in the UK on 5 July 2012
The US banks, operating under risk-based compliance programs, are reducing risk wherever possible, and the Caribbean, which through the accident of geography is both a transit zone for narcotics and a favoured money laundering destination. unless the Caribbean financial institutions have a means of assuring the onshore US banks that their clients/customers are all legitimate, correspondent relationships, even those which have been maintained for decades, are at risk.

The American banks need to know who your customers are, in essence, Know Your Customer's Customer, or KYCC is the solution. Armed with this knowledge, the risk managers can ascertain whether any of the Caribbean bank's own customers pose a threat, and should be terminated. This procedure also helps the Caribbean bank reduce its own risk level, and therefore improve anti-money laundering, and countering the financing of terrorism programs.

New technological advances in compliance programs allow users to identify unsatisfactory or high-risk customers, or good customers who later have issues that raise their risk levels, as well as all your low-risk clients who should be retained. Space does not permit an adequate and illustrated description of those programs, and why they are an acceptable means of restoring the correspondent bank's confidence in your client base and AML/CFT program, but if any readers are not familiar with those programs, feel free to send me an email at: with your query and I will respond to you in detail.

While it is the Caribbean banks that are reporting the most terminations of correspondent relationships, a recent report from other areas of the developing world also indicates that similar situations were occurring in Latin America, Asia and Africa.

I hope that those banks also choose an effective solution, before they also suffer what might be a catastrophic loss in correspondent relationships.
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