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TCI Finance Minister tables new bill to TIGHTEN DUE DILLIGENCE

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By Dana Malcolm

Staff Writer

 

#TurksandCaicos, December 15, 2022 – Turks and Caicos is aiming to strengthen its investor vetting process, taking note of the scandalous FTX debacle in Nassau, Bahamas involving an American crypto currency businessman now charged with fraud against millions of clients.

In an effort to prevent instances of financial misconduct in the Turks and Caicos, Members of the House of Assembly have now passed a bill that gives Invest Turks and Caicos Agency the power to assist with carrying out certain background checks on potential clients.

The Invest Turks and Caicos Islands Agency (Amendment) Bill laid by E Jay Saunders, Minister of Finance Investment & Trade on Tuesday December 13 will strengthen what Saunders described as the agency’s Know Your Client (KYC) capabilities.

The Minister explained that KYC was a due diligence process used to verify the identity of a person or business and assess the level of risk involved in doing business with them. Saunders referenced the collapse of FTX in neighbouring Bahamas and the subsequent indictment of Sam Bankman-Fried.

Deputy Premier Saunders offered that the case had nothing to do with The Bahamas Government, still FTX ‘brought them a headache they certainly didn’t need.’

“Our Government is amending the Invest Turks and Caicos Islands Agency Ordinance to empower Invest TCI to develop policies, particularly, the Due Diligence Policies, and to charge fees for conducting Due Diligence checks—.” he explained.  “A Due Diligence check involves careful investigation of the economic, legal, fiscal, and financial circumstances of a business or individual.  This covers aspects such as sales figures, shareholder structure, and possible links with crimes.”

It also allows Invest TCI to assist with due diligence for applications of permits under the investment category in the Immigration ordinance.

Saunders maintained that as money transfer tech multiplies and becomes more sophisticated it is increasingly important for the country to safeguard its assets and become even more aligned with global anti-money laundering standards and best practices.

Recently the TCI was placed on the EU blacklist of non-compliant tax jurisdictions.  Despite the lopsided parameters, investigated by Magnetic Media and repeatedly chided by world leaders that are used to decide who lands on the Blacklist, it’s not a place any country wants to be.

Saunders has committed to get the Turks and Caicos Islands off the infamous list.

Finance

UK holds steady on interest rates 

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Dana Malcolm

Staff Writer 

 

#UnitedKingdom, September 24, 2023 – For the first time since 2021, the Bank of England has decided to ‘hold steady’ on interest rates rather than increase them.

The decision comes following an unexpected fall in inflation in the European country.

It means UK consumers’ interest rate remains at 5.25 percent.  According to the BOE reports tabled on September 21st, only 5 of the nine members of the Monetary Policy Committee (MPC) voted to keep the rate steady.

The Bank expects the inflation rate, currently at 6.7 percent, to reach the two percent target by mid-2025 and food inflation is going down.

But at the same time, the UK’s Gross Domestic Product GDP declined in July and growth is expected to stay weak, plus, unemployment is on the rise in the country.

“The Labour Force Survey unemployment rate rose to 4.3 percent in the three months to July, higher than expected in the August Report,” the bank explained.

The US also recently held steady on its interest rates after a significant period of increase.

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Finance

Canadian analysts watching for recession 

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Dana Malcolm

Staff Writer

 

#Canada, September 9, 2023 – Financial analysts are watching the Canadian economy for the possibility of recession following a contraction in its Gross Domestic Product (GDP) for the second quarter of 2023, and a decision to keep interest rates at 5 percent.

The Bank of Canada decided to ‘hold steady’ on interest rates this Wednesday, a week after Information shared by Statistics Canada revealed the country’s GDP declined last quarter, failing to reach the over 1 percent growth that was predicted by economists.

“The slowdown was attributable to continued declines in housing investment, smaller inventory accumulation, as well as slower international exports and household spending,” Statistics Canada explained.

Central Banks in North American countries like Canada and the US have been hiking interest rates over the past year to balance out inflation. Both countries want inflation levels to remain at 2 percent.

A recession occurs when a market records negative GDP growth for two consecutive quarters. If Canada records another contraction in its GDP for the third quarter of the year, it will officially be considered to be in a recession.

In late 2022, the Royal Bank of Canada had predicted the country would fall into recession early this year because of cooling housing markets and high interest rates.

The country has not recorded a recession since the beginning of the pandemic.

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Finance

TCI Commercial Banks CAUTIOUS about LENDING, Report reveals

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By Dana Malcolm

Staff Writer

 

#TurksandCaicos, August 14, 2023 – Credit risk in the Turks and Caicos is decreasing; however, local banks are still very cautious with their lending practices, according to the latest annual report from the Turks and Caicos Financial Services Commission (2021-22).

The FSC Bank and Trust Department oversees the six banking institutions operating locally, their report indicated that the bank’s liquid assets grew massively because residents began to save more money.

“The increase in the sector’s assets was funded by customers’ deposits, which grew by 26.5 percent,” it said. That pushed assets between the six banks to $2.7 billion. Banks are turning a profit, just not as much as before COVID-19. Still, the cash was good enough that they could shutter loan loss provisions they had made.

Not only were customers depositing more money, but with the improved state of the local economy, residents wishing to borrow were resilient to the impact of COVID-19.

Also, fewer residents were defaulting on their loans, the FSC found, with a 29 percent drop in non-performing loans (loans in default), and because of that banks spent 40 percent less on provisioning (money used to cover loans in default). Only four percent of all the loans in the country were listed as non-performing, a decline from five point four (5.4) percent the period prior.

Despite this, fearing rising inflation, and health crises globally, banks responded with ‘conservative lending practices and risk appetites.’

This was at the height of the COVID-19 pandemic.

Residents locally have complained bitterly about the difficulty they face in securing loans and Washington Misick, TCI Premier, has repeatedly put local banks on blast for de-risking and vowed to have the UK step in, to date there has been no change.

Meanwhile, five of the six banks recorded increases in assets and loan portfolios were smaller for four of them.

The FSC also revealed that with banks holding tight to the purse strings, an unregulated credit market had been allowed to flourish locally, which they said was a cause for concern.

“A growing non-bank lending market has emerged in the TCI, which creates competition for the banking sector. This increases the risk to the financial sector if left unregulated and should credit conditions deteriorate,” they explained.

Another concerning revelation is that Money Sending Businesses (MSBs), which are heavily patronized in the country because of the high level of expatriate workers, are taking a hit as well. This time because of high banking costs, de-risking and the emergence of alternate ways to send cash.

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