BELIZE CITY, Thurs. Aug. 13, 2015–The recent wave of reports that certain banks licensed to operate in Belize have lost or are about to lose their correspondent banking relations with Bank of America, a top bank in the US, is cause for concern within the private sector, which relies on those services to transfer US currency into and out of Belize, and sometimes to settle foreign bills.

The issue is, more widely, one of great national concern and one which was inevitably raised today at the Public-Private Sector Business Forum 2015, held at the Best Western Belize Biltmore Plaza Hotel in Belize City.

Kay Menzies, the private sector leader who co-chairs the Economic Development Council (EDC), told Amandala, when we asked about the issue, that, “The folks in the room are very, very concerned – understandably.

“The Central Bank works to keep our dollar rate stable, but if we lose correspondent banking relations, that is a big concern, because if you can’t access the dollars or send them out to pay your bills, you have a serious problem that a stable dollar doesn’t help.”

Mike Singh, the government representative who chairs the Council, told Amandala that Deputy Governor of the Central Bank of Belize, Christine Vellos, also addressed the issue in her presentation this afternoon.

Singh said that the issue for large banks, such as Bank of America, is that a small country like Belize, with which they do business, has customers that they are unable to vet. They weigh the money they make from having a relationship with a small country like Belize against the risk, and if there is not a whole lot of benefit, it’s not worth risking the fines that could be levied by the authorities in the US and Europe—which can be very high.

“So it’s an issue that we just have to live with,” said Singh.

He told us that he was at a conference of the World Bank a few weeks ago, where the topic also came up.

“And every country in the Caribbean is facing this issue, and the only way to deal with it is to learn how to be compliant, number one, and to work lobbying at a higher level… the authorities in the [Organisation for Economic Co-operation and Development] OECD [so they could] understand the impact that this is having on our economies, and I think we are doing quite a lot of that,” Singh told us.

“Until we get to that point, it’s just something we have to live with. It’s like living in a hurricane belt,” he added.

Singh’s comments helped to shed light on international press reports published this week, citing a Bank of America statement, which was reportedly issued on July 28, 2015.

When we contacted the bank regarding the statement and sought clarity on the claim that the bank had actually decided to sever correspondent banking relations for ALL such transactions with Belize, Louise Hennessy, Senior Vice President, Global Transaction Services Communications, wrote us back saying that the bank did not wish to comment.

While not much has been officially said about the exact reason for Bank of America’s decision to cut off the Belize Bank and Belize Bank International this April, government officials who had met with them earlier that month said that bank officials had cited “a business model mismatch.”

The Bank of America statement cited in the recent news reports are more revealing, saying that, “The reason for the suspension of service, the bank said, was to comply with the regulations imposed on Caribbean and Central American regions by large U.S. and European banks, under pressure from the U.S. government.”

It added that, “This process has ended Bank of America’s association with a number of Caribbean and Latin American banking institutions.”

In discussing the matter with journalists on Sunday, Prime Minister and Minister of Finance Dean Barrow, who had headed the delegation to meet with Bank of America over three months ago, spoke of the severing of correspondent banking relations in the context of “de-risking.”

The news reports, citing the Bank of America decision, explained that de-risking is the process of reducing risk to its bank rating based on standards applied by the Caribbean Financial Action Task Force (CFATF)—the same task force which had cited Belize for not meeting standards to combat money laundering and terrorist financing, for which the country had been threatened with G-7 sanctions last year.

However, Belize was recently promoted to the status of a jurisdiction in good standing after it implemented sweeping legislative reforms that imposed stricter reporting requirements on banks licensed to operate in the jurisdiction, among other measures.

“The Caribbean Financial Action Task Force has created regulations for U.S. correspondent banks to control possible money laundering. Compliance to these regulations, however, is causing many banks in the region to lose their connection to the U.S. banking system,” the news report said.

Apart from the grim financial news of certain Belize banks losing correspondent banking relations with Bank of America, there was a recent report published this week by USA Today and 24/7 Wall Street, and authored by Thomas C. Frohlich, Alexander Kent and Sam Stebbins, which ranks Belize as #4 among the 7 countries nearing bankruptcy.

Singh said that he spent a lot of time trying to look at their criteria, and it seems that they didn’t look at Belize very closely, because the ranking of Belize among the top 7 cannot be accepted as accurate.

“I am in the process of reaching out to the [writers] of that article, to provide as much information as we can to support a countering view to what [they were] attesting. I mean [they are] putting us in the ranking of countries like Greece and countries that are obviously having bankruptcy issues…

“Our fundamentals are strong; the Central Bank Deputy Governor did a bunch of reports today speaking about the strengthening of our banking system – that fact that our non-performing loans in the system are just a little bit over 5%, which is the international best practice. We are at 6.3%, I believe, and that’s down from where it was before, which was in the 20s,” Singh argued.

He added that Belize’s foreign exchange level remains strong and there is no run on the banks, so he finds it very hard to understand the criteria upon which such an article was based.