Comments on the Sasha Wass Inquiry on Child Sexual Abuse in St. Helena and Ascension

Posted on December 12, 2015 by Bruce

The general and somewhat vague account of some of the social welfare/human rights issues on the British Overseas Territory of St. Helena and Ascension copied at the bottom of this message has been overtaken by the long-awaited publication of the Sasha Wass Inquiry on Child Sexual Abuse in St. Helena and Ascension, commissioned by the UK Foreign and Commonwealth Office to investigate accounts of incompetent government response to child abuse allegations in St. Helena has overtaken the widely disseminated “Social Work …” article copied at the bottom of this posting. The Sasha Wass Enquiry report is over 300 pages long and may be downloaded — for now at least — at <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484129/51735_Wass_Inquiry_Web_Accessible_PDF.pdf>. 

Commentator Bob Conrich of Anguilla passes on this  Summary of the Sasha Wass Enquiry, with the caveat that the FCO distillation of the report is somewhat distorted, and that in turn, the Wass Enquiry may be deficient. Read the whole report above.

The Sasha Wass Inquiry on child sexual abuse in St. Helena and Ascension was released yesterday.  Four hours later, the FCO Minister for the Overseas Territories issued an
official statement that picked out the favourable parts of the 314-page report.  He made it sound like St Helena is an unblemished paradise for children and the adoring Saints.

Every subsequent press report in the UK that I’ve seen is either based solely on this misleading and deceptive ministerial summary, or emphasises a similar point of view. Finally, today, we have what I consider to be an accurate story from today’s St Helena Independent, which I post below.

I’ve said this before and it’s important that I repeat it: I’m not aware of any child sexual abuse in Tristan.  There are vast social, cultural, economic and historical differences between St. Helena and Tristan.

But the two islands have the same Governor, and the Head of the Governor’s Office is Sean Burns, the secretive previous Administrator of Tristan.  So they have the same management.  Or mismanagement, if I may.

Following last week’s Joint Ministerial Council in London, the Governor and his wife wisely disappeared “on leave.”  So much for leadership.

I continue to believe that the good people of all three islands deserve better.

Bob

The Governor and the Queen’s Counsel
by Vince Thompson of the St. Helena Independent

The Wass Report

On 20th November last year it was announced there will be an
Inquiry into allegations of child abuse in St Helena and that
Sasha Wass QC will lead the Inquiry. The Wass Inquiry Panel
visited St Helena in March 2015 for a period of 16 days to
conduct the most important phase of the Inquiry. March 2015
was the original date the Inquiry was intended to be com-
pleted and submitted to UK Government ministers. Progress
with the Inquiry was delayed for two main reasons, one of
which was the St Helena Attorney General claiming the In-
quiry had no legal authority in St Helena and the Inquiry Panel
would not be allowed access to the St Helena Government’s
police and social services files. The legal argument about the
Inquiry Panel’s rights of access to all St Helena Government
files continued until a few days before the Inquiry Panel was
due to travel to St Helena. The Panel’s solicitor stated Gover-
nor Capes, as the Queen’s representative, simply had to di-
rect that all files are to be made available to the Inquiry Panel.
The Wass Report states, ‘The approach by the St Helena
Government bypassed that singular solution, causing a delay
in the resolution of access to documents.’

On 28th November, eight days after the announcement of the
Wass Inquiry, St Helena Government announced that a new
Safeguarding Directorate was to be established; the first Safe-
guarding Director arrived in St Helena in January this year.

Since that time various improvements, new initiatives, addi-
tional facilities, extra staff and specialist training have been
put in place. Extra funding has been allocated to St Helena
by the UK Government to enable these various improvements
and changes.

Findings of the Wass Inquiry Panel

Lack of Continuity

The Wass Inquiry found the failings in the system go back at least 14 years and also identifies what some of the failings are. Lack of continuity is one of them. Arrangements for handover from one manager to another and from one governor to another is a main cause, Officials have not established procedures for maintaining best practice and are often inexperienced or ignorant of best practice concepts and how to establish the required procedures. Lack of continuity meant that several previous relevant reports were unknown to officials arriving to take up posts after they were published. The St Helena Government is also criticised for not advertising key professional posts until weeks after the previous post-
holder has left the Island.

With regard to the change-over from one governor to another
the Report states, ‘The handover from one Governor to the
next is clearly inadequate in both scope and depth. The cur-
rent Governor, Mark Capes, told the Inquiry Panel that he
was not made aware of the previous reports into child safety
prepared on St Helena until after he assumed office in 2011.
Governor Capes said: “I can’t speak for why those reports
were ignored…St Helena has been neglected for decades…by
the UK government.”

Failure to Act Quickly and Decisively

The Wass Report also states, ‘Governor Capes’ attention was
specifically drawn to matters which required urgent consid-
eration by an email from Viv Neary, the Child Protection Co-
ordinator for British Overseas Territories, in March 2012. These
included the lack of a formal arrangement for fostering chil-
dren on the island; and the fact that the only qualified social
worker was due to leave in May 2012 with no replacement
ready to take over. Neither of those two matters was re-
solved by the Governor, and his failure to heed the warnings
given to him directly impacted on the complications that arose
during the Child F adoption case in late 2013 and early 2014.’

Uninformed and Out of Touch

The Wass Inquiry Panel covered a wide range of organisa-
tions, departments and community interests during their 16-day visit to St Helena. During those 16 days it appears they
learnt more about St Helena than the governor had in three-
and-a-half years. The Report states, ‘On St Helena the In-
quiry Panel ‘looked in detail at the Police Service, the Social
Services Department, the four schools, the health service,
the criminal justice system, the prison service and the Gov-
ernment. We conducted formal recorded interviews with the
Governor, the Head of the Governor’s Office, the Chief Secre-
tary, the Assistant Chief Secretary, the Attorney General, the
Solicitor General, the Chief Magistrate, the Chief of Police,
the Public Solicitor, the heads of the various directorates and
other office holders.’ While discussing public health issues
with Governor Capes the Wass Report tells us, ‘Governor
Capes visited Barn View at Christmas 2011 in order to present
the staff with a cake. When asked by the Inquiry Panel about
the condition of the establishment, Governor Capes said:
“What impressed me was the level of care and the atmos-
phere of the place then was very very good.” The Inquiry Panel
was unanimously at a loss to explain how the Governor could
have come to this conclusion. Within months of Governor
Capes’ visit, the Police Development Officer in charge of safe-
guarding prepared a report for the St Helena Government de-
scribing some rooms in Barn View as being “akin to those of
solitary confinement in prison films: stark, cold and despair-
ing.’

When discussing the arrangements for medical evacuations
when the airport is operational the Wass Report states. ‘Gov-
ernor Capes told the Inquiry Panel in March 2015 that there
was no arrangement in place for St Helenians to receive medi-
cal treatment in Johannesburg.’ After having used this infor-
mation later to criticise St Helena Government the Wass In-
quiry was told, ‘The SHG Health Directorate has already com-
pleted an assessment of potential Private Healthcare Provid-
ers in Johannesburg and Pretoria with the view to concluding
a comprehensive service level agreement for healthcare for St
Helenians in South Africa. It is expected that there will be an
invitation to tender in December with the intention of having a
contract in place when flights commence.’

The lack of an air link between St Helena and Ascension was
also raised with Governor Capes. The Wass Report quotes
the Governor’s response as follows, ‘Any new link is not go-
ing to be subsidised and we’re going to pay full cost. Who’s
going to pay the full cost? That has to be the employers on
Ascension who are willing to help share the cost of that serv-
ice. And the signs are that some may not want to do that’.
The Wass Report notes that, ‘On 9 October 2015, the As-
cension Island Government and the St Helena Government
selected Comair Ltd as the preferred bidder for the provision
of a monthly air service between St Helena and Ascension’.

The Wass Report’s Assessment of Governor Capes as Governor

‘The picture that emerged to the Inquiry Panel was that St
Helena was still being run as a colony, with the Governor
acting as the Queen’s representative and delegating the day-
to-day responsibility of managing the island to others. The
island has a population of approximately 4,000. This is the
size of a small English village or a medium-sized company.
There is no justification for a disconnect between the Gover-
nor and the practical issues of day-to-day management. The
Governor’s dual role on St Helena is as de facto head of state
and his primary day-to-day role as Head of Government. It is
easy to appreciate that the two roles can conflict. The Gover-
nor, as head of state, effectively delegates tasks to himself
as Head of Government. It is essential that as Head of Gov-
ernment he follows up delegated tasks to ensure that they
are fulfilled. The Inquiry has seen evidence that Governor Capes
ignored warnings given to him about the management of the
island and has responded to the Inquiry on more than one
occasion that he had delegated certain tasks as if that were
the end of his responsibility. The Governor of St Helena’s role
in such a small community with limited resources requires
active and involved management such as the Inquiry found on
Ascension Island. The august title belies the need for a shirt-
sleeved manager. Matters of great concern cannot be effec-
tively dealt with from Whitehall. The commissioning of further
reports should be a matter of last resort, not a routine solu-
tion to local difficulties.’
:: Ends ::

The full report may be downloaded at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/484129/51735_Wass_Inquiry_Web_Accessible_PDF.pdf

 

Social work on a small island: safeguarding adults in St Helena

By Gerry Nosowska

St Helena is a volcanic island in the middle of the South Atlantic, 10.5 miles long by 6.5 miles wide, with a population of around 3, 700. Currently the only way to and from the island is the Royal Mail Ship which visits every month from Cape Town. It is a self-governing UK overseas territory and people there are British citizens.

Shaken by scandal

Last year the island was shaken by scandal when allegations emerged of covered up child abuse taking place on a large scale.

When I visited the Safeguarding Directorate responsible for children’s and adults’ social care set up last year, I found that its main focus has been child protection following the painful exposure of abuse. But I wanted to learn about how adult social care was being carried out amidst this pressure, in such a remote and remarkable setting.

St Helena has the advantages that small communities bring of strong relationships and opportunities for creative work. Research on social care in remote places shows that they encourage relationship-based work and community involvement, flexibility and joined up work with other agencies.

Small community

People on St Helena look out for each other, they talk to each other and they include one another. While I was there, people knew what I was doing, they asked me how I was getting on, helped me, waved to me and offered me lifts. There is nobody on the island whose need would not be noticed. People exchange expertise, barter and offer reciprocal help.

On the other side, remote places face issues from lack of resources, including expertise. Staff there need support for their development and with managing the tensions that arise from working with people they know well.

Potential

Adults’ services on the island have real potential. Vulnerable people currently have care and support from families and friends and, when needed, from sheltered housing, supported living and the Community Care Centre. There are disability living allowances and carers’ allowances; and there are close links with the hospital and community nurses.

However, there are no formal systems, no policies and procedures, and no community services. Much work is needed to create real choice and control for service users, to develop care workers’ skills, and to ensure everyone is safeguarded.

Person-centred work

I think there is great scope on the island for person-centred ways of working, and for care and support that builds on individuals’ and the community’s strengths. This needs to start with developing individual, responsive care for people who currently have very limited choice and control, particularly those who have been in institutional care.

The island’s new manager for adults’ services, Paul, aims to draw on local expertise and ensure local involvement so that services fit St Helena and are sustainable. For example, currently if someone has a concern about someone, they stop the social worker on the street and mention it. More formal systems might put people off raising issues.

Lessons to learn

St Helena has the opportunity to develop adults’ services that are less bureaucratic than in the UK, more approachable and more personal.

There is a lot to do in St Helena and a lot it can learn from the UK about what has worked here, including from Making Safeguarding Personal and Think Local Act Personal.

But I think we too have lessons to learn from this remote island about how to do good community social work.

Link to <http://www.communitycare.co.uk/2015/11/30/social-work-small-island-safeguarding-adults-st-helena/>

Posted in Governance | Leave a comment

Pacific Island Youth Speak Out on Climate Change

Posted on November 29, 2015 by Bruce

from the Deutsche-Welle web site: <http://www.dw.com/en/pacific-islands-youth-skeptical-of-cop21/a-18873278>

PACIFIC ISLANDS

Pacific islands youth skeptical of COP21

While small Pacific islands are in danger of vanishing due to rising sea levels, their younger inhabitants are skeptical that the climate summit in Paris will change that, a DW reporter discovered at a Bangkok forum.


In a building filled with hundreds of young people from all over the world, Tim Baice still clearly stands out. With a pink flower tucked behind his ear, his tall head overlooks the crowd. He is more calm and observing than many of his fellow attendees at the One Young World Forum in Bangkok.
“It is heartbreaking to think that at a future One Young World summit there will be no reps from Tuvalu, Kiribati, Vanuatu or Samoa,” the young Samoan says. “Because [then] we have no countries.”
Baice came together with young leaders from all around the world in Bangkok – at the youth-focused conference. Topics range across the humanitarian and business spectrum.
But one issue is looming over them all: Climate change. Only two weeks ahead of the 21st Conference of Parties (COP21) meeting on climate protection in Paris, Baice and other attendees are urging their countries’ leaders to make Paris a success.
Global warming at the front door

Tim Baice from Samoa believes that even if the Paris climate summit is a success, Pacific islands won’t be saved

During the conference, Baice meets up with Annette and Paulo, fellow attendees from Vanuatu and Timor-Leste. They are also somber about their countries’ issues, as climate change isn’t an abstract concept for them anymore.
The effects of global warming are taking place right at their doorsteps. Smaller islands such as Kiribati are not only in danger of being swallowed by the rising sea level – changed weather conditions mean more frequent and intense storms – just like cyclone Pam earlier this year.
Young doctor Annette Garae worked the night when cyclone Pam hit her home island Vanuatu. “They called us in for an emergency caesarean,” recalls Garae of her shift that night. At that same moment, she remembers, the cyclone was about to make landfall.
“You could see the wind, and we had to evacuate patients into the new building – it was really scary.” The mother and child survived surgery under the extreme conditions. But in many cases, the true challenges await after the storm has passed.


‘Climate change will make them sick’
“It destroyed most of our resources and buildings,” Garae told DW. Aside from their struggle to get good healthcare – Garae worries that as climate change sets in, people in Vanuatu will be more exposed to infectious and other diseases. “These will start to rise as [impacts of] climate change increases,” the doctor is convinced.
Paulo Dos Santos Borges of the organization Science of Life Schools has to battle these health issues also in the educational field. His organization provides boarding schools and training programs for young people in Timor-Leste. But rising sea levels have been compromising the sanitation of buildings in his project. “The water has become fecal,” he says.

Young doctor Annette Garae from Vanuatu worked the night cyclone Pam hit her island

Former East Timor, first a Portuguese colony and then an Indonesian province, only gained independence in 2002. With half of its 1.2 million people living in poverty, education and health have been among the greatest challenges for the young country. Climate change has hindered progress on these issues.
Small Pacific islands need to unite
Tim Baice, Annette Garae and Paulo Dos Santos Borges stick together, with their fellow attendees from the small Pacific islands. In the evenings, they all meet up to have dinner together in a park in Bangkok.
“One of the highlights of this conference is that we kind of come together naturally and put aside those kinds of national boundaries,” says Baice.
“But how do we translate that into going home and affecting some changes and the thinking of governments?” To Baice, the small islands aren’t organized enough to find a united voice.

Climate Change is impeding healthcare in poverty-stricken Timor-Leste

“We are doing different things on different islands and spaces, it is so uncoordinated,” he told DW. This makes it hard for the young people to fight a common cause. Instead each small group battles its own issues.
Working as a communications advisor for the Samoa Youth council, Baice has reached out to the young attendees of bigger nations in their region such as Australia and New Zealand in hope they would unite for their cause.
“They couldn’t give two bleeps about what the islands are going through,” he says with clear disappointment. “They don’t see it for themselves.” This indifference for the fate of the small islands, he finds, is confirmed at the governmental level.
Hope for Paris?
Baice points out how Tuvalu prime minister and other Polynesian leaders have been calling on Australia to place a moratorium on building coal mines and to stop selling coal in the region.

Humanitarian worker Paulo Dos Santos Borges laments how many people don’t know Timor-Leste exists

But at the Pacific Island Forum in early September, former Australian Prime Minster Tony Abbott rejected such measures, also when directly asked by the Pacific island nations.
“I thought that was such a cold and heartless response, and basically focused on Australia’s need to make money,” Baice says bitterly.
The behaviour of Australia’s former prime minister makes Baice skeptical about the COP21 summit that begins at the end of November in Paris. “I have very little faith that this meeting will achieve anything,” says Tim Baice. If the neighbour countries don’t understand the issues of the small islands, how can the rest of the world? “Money matters, the economics and capitalism won’t change.” Not for a view islands in the Pacific ocean anyway.
Garae, the young doctor, has more hope. “I am grateful that I am here along with my other Pacific island nations, and I think just by being here, it is allowing us to put our voice to be heard,” Garae says.
Garae adds that she realized at the conference in Bangkok that this isn’t just a fight for the Pacific islands: “There are other small islands from Asia and around the world that are going through the same thing.”
Dos Santos Borges agrees. Although not everybody is aware about a small island like Timor-Leste, they might be more aware about how climate change is an issue for the small islands – and beyond.

DW RECOMMENDS

Vanuatu after the Cyclone

A report by Dieter Hermann (28.03.2015)


Exposed: Why Vanuatu is the world’s most ‘at-risk’ country for natural hazards

Vanuatu is the world’s most at-risk country for natural hazards, according to a UN University WorldRiskIndex. And it’s not just storms, earthquakes, volcanoes or tsunamis that are the Problem. (17.03.2015)


Climate change: The ‘greatest threat’ to the peoples of the Pacific

Amid growing concerns over rising sea levels, this year’s Pacific Islands Forum summit has started. Its Secretary General Tuiloma Slade reiterates that climate change threatens the viability of the forum’s member states. (30.07.2014)

Posted in Climate Change, Development, Small Island | Leave a comment

Funny Story from The Week Magazine

Posted on November 27, 2015 by Bruce

> “A Singapore Airlines flight had to make an emergency landing after emissions from a flock [sic] of flatulent goats triggered smoke alarms. The cargo plane was en route from Sydney to Kuala Lumpur, carrying 2,186 goats, when crewmembers heard a warning indicating the plane was on fire. The 747 diverted to Bali, where emergency services boarded the craft but were unable to find any trace of fire, heat, or smoke. Inspectors concluded that a harmless buildup of “exhaust gases and manure” produced by the live cargo had triggered the alarm.”

Some may remember Jim Alexander and Diana Josephson, who were our partners when we originally bought the house in Annapolis. At one point Jim was actively involved in trying to develop a new line of commercial airships (blimps) for transport. Jim figured a good market would be carrying sheep (or goats — many of us really can’t tell the difference) from Kenya to Saudi Arabia. . . .

. . . . or Sydney to Kuala Lumpur, I suppose.

In the event, it never got off the ground.

Posted in Fun | Leave a comment

Twenty-first Century Ambition . . .

Posted on November 15, 2015 by Bruce

from Dustin: <http://dustincomics.com/comics/november-14-2015/>

November_14__2015___Dustin

Posted in Fun | Leave a comment

Routledge Handbook of Ocean Resources and Management

Posted on November 3, 2015 by Bruce
[From Tundi Agardy, Island Resources friend and an expert on the Caribbean Sea, among other marine topics.]

Edited by Hance D. Smith, Juan Luis Suárez de Vivero, Tundi S. Agardy

© 2015 – Routledge

612 pages | 103 B/W Illus.

About the Book

This comprehensive handbook provides a global overview of ocean resources and management by focusing on critical issues relating to human development and the marine environment, their interrelationships as expressed through the uses of the sea as a resource, and the regional expression of these themes. The underlying approach is geographical, with prominence given to the biosphere, political arrangements and regional patterns – all considered to be especially crucial to the human understanding required for the use and management of the world’s oceans.

Part one addresses key themes in our knowledge of relationships between people and the sea on a global scale, including economic and political issues, and understanding and managing marine environments. Part two provides a systematic review of the uses of the sea, grouped into food, ocean space, materials and energy, and the sea as an environmental resource. Part three on the geography of the sea considers management strategies especially related to the state system, and regional management developments in both core economic regions and the developing periphery. The primary themes within each chapter are governance (including institutional and legal bases); policy – sets of ideas governing management; and management, both technical and general.

For details and to order, go to <https://www.routledge.com/products/9780415531757> and search on Routledge Handbook.

Posted in Resource Management, Watershed Management | Leave a comment

Civil Society Under Assault

Posted on November 2, 2015 by Bruce

An excellent overview by Doug Rutzen, president of the International Center for Non-Profit Law (ICNL, http://www.icnl.org) documenting steps taken in the last decade to restrict actions and freedoms of organizations of civil society. Published in the Journal of Democracy Volume 26, Number 4 October 2015, page 28.

Conclusion:

Several recent studies examining constraints on international funding and the political environments in which they arise support the UN Special Rapporteur’s (UNSR’s) assertions. One study found that in most countries where political opposition is unhindered and voting is conducted in a “free and fair” manner, international funding restrictions generally are not imposed on CSOs. By contrast, in countries where election manipulation takes place, governments tend to restrict CSO access to foreign support, fearing that well-funded CSOs could contribute to their defeat at the polls.  In other words, vulnerable regimes hoping to cling to power sometimes restrict international funding in order to weaken the opposition.

After the fall of the Berlin Wall, many countries saw the importance of defending civil society. Today, however, many countries are de-funding civil society. Using all sorts of pretexts, governments that feel threatened by such organizations impose restrictions on them. These governments are able to do so in part because the cornerstone concepts of civil society are still being developed, debated, and—at times—violently contested. The outcome of this debate will shape the future of civil society for decades to come.

2015_10_AuthoritarianismGoes Global-2_CivilSocietyUnderAssault-ICNL_Pres_Doug_Rutzen

Posted in Civil Society, Governance | Tagged | Leave a comment

Living Wall on PNC Bank, Baltimore

Posted on November 2, 2015 by Bruce

Nice work, thanks PNC.

Yeah, those are plants on the front of the PNC Building in downtown Baltimore . .

Posted in Fun | Leave a comment

De-Risking Is De-Linking Small States From Global Finance

Posted on October 26, 2015 by Bruce

Working in sustainable development of small islands, it’s not hard to get blind-sided by bad (or sometimes good!) news from unexpected sources. This article from NASDAQ may spell tough times for many islands — not only financial services specialists.

from NASDAQ on-line <http://www.nasdaq.com/article/de-risking-is-de-linking-small-states-from-global-finance-cm533660>

De-Risking Is De-Linking Small States From Global Finance

By SeekingAlpha, October 23, 2015, 07:29:48 AM EDT
AAA

By Otaviano Canuto and Veronica Ramcharan

Small states, like the Caribbean countries, have been negatively affected by recent “de-risking” policies implemented by international banks, with particularly damaging consequences on correspondent banking relationships. While recommendations from the Financial Action Task Force (FATF) to deal with risks of money laundering and terrorism financing have often been mentioned to justify those de-risking practices, a wide variety of factors seems to have been at play. Urgent action to address the issue is needed to avoid unintended potentially devastating effects on the economies of those countries.

Managing risks is no de-risking

The Financial Action Task Force (FATF) has recommended banks to follow a risk-based approach in doing their part of the Anti Money Laundering and Combating the Financing of Terrorism (AML/CFT) efforts. Together with competent government authorities, financial institutions are expected to identify, assess and understand the risks of money laundering and terrorism financing to which they are exposed and take AML/CFT measures commensurate to those risks in order to mitigate them effectively.

Several international banks have referred to such recommendation as the reason for taking recent de-risking decisions, through which they have denied and/or restricted entire classes of customers from financial services without conducting a comprehensive assessment of their level of risk or risk mitigation measures for these customers. The public statement issued by the FATF in October 2014 refers to “de-risking” as the occurrence of financial institutions terminating or restricting business relationships with clients or categories of customers, to avoid, rather than manage, risk in line with the FATF’s risk-based approach.

According to that same statement, such behaviour is contrary to the intended purpose of FATF’s risk-based approach, which is a fundamental aspect of the FATF standards. FATF recommendations only require financial institutions to terminate customer relationships, on a case-by-case basis, where ML and TF risks cannot be mitigated.

The recently intensified de-risking has had a disproportionate negative effect on small state countries, where specific challenges faced by those countries have exacerbated the effect of de-risking and the subsequent loss of correspondent banking relationships (CBRs) with tier 1 financial institutions in advanced economies. These challenges typically include relatively shallow banking systems, under-developed financial markets, highly concentrated financial systems dominated by foreign banks, domestic currencies that are not internationally traded and often a heavy reliance on remittances. Not only is the adverse effect of de-risking intensified in these countries, but the timeline for an acceptable solution to be implemented has significantly shortened, as the underdevelopment of financial sectors in the majority of these countries make a potential economic collapse imminent if a viable solution is not found in the near future.

Correspondent banking is an essential component of the global payment system, especially for cross-border transactions. Through CBRs, banks can access financial services in different jurisdictions and provide cross-border payment services to their customers, supporting, inter alia, international trade and financial inclusion. In addition, most of the payment solutions that do not involve a bank account at the customer level – such as remittances – rely on correspondent banking for the actual transfer of funds. Therefore, the effects of de-risking through the termination of CBRs have been particularly severe.

De-risking in the Caribbean Small States

In the Caribbean region, comprised mainly of small island developing states, CBRs with financial institutions from advanced economies have steadily declined over the last couple of years. The adverse impact of de-risking is significant and can impact these countries on several fronts, primarily through international trade, financial stability and growth. While the problem associated with de-risking is not entirely new to the Caribbean, it became progressively worse over the years and has now reached a critical point. For example, several years ago, a major US correspondent bank ceased offering cash services to several central banks in the region.

Nonetheless, this loss was replaced by another international bank as the Caribbean countries acceded to more stringent due diligence processes including “know your customers’ customer” attestations – despite the significant constraints and uncertainty of the process. It should be noted that at the FATF Private Sector Consultative Forum Meeting held in March 2015, it was reiterated that the FATF standards do not require a “know-your-customer’s-customer” approach to conducting customer due diligence.

While Caribbean countries have struggled to abide by ever changing standards and requirements, the amount of CBRs continue to decline. The problem is further compounded by the fact that they do not have a long list of international institutions to choose from to begin with, as only a small number of tier 1 financial institutions offer financial services to the Caribbean region. Therefore, given the limited pool of institutions with which they can engage – in most cases, there may be only one or two institutions – the loss of each correspondent bank successively increases the already disproportionately high level of operational risk.

The impact of de-risking on money transfer businesses (MTBs) is of particular concern, as money transfers to the Caribbean exceeded all other forms of external finance in 2014. Remittances to the Caribbean increased by 6.3 percent compared to 2013, totalling US$9.9 billion. However, the MTBs are the latest regional casualties, as correspondent banks have begun to sever ties with these institutions, citing excessive compliance cost to meet corresponding requirements. While it is generally accepted that MTBs are among the higher risk clients, this does not automatically imply that they are conducting illegal business activities, as they are often held to the same standard of AML/CFT requirements as the banking sector.

Further to this, remittances themselves have intrinsic “growth value” as they can promote development and facilitate greater financial inclusion, all of which can help drive strong, sustainable and balanced growth. Therefore, the continued erosion of CBRs can significantly reverse the level of financial inclusion in small state countries. De-risking also presents challenges for financial inclusion goals by further limiting access to formal bank accounts for potential customers – who may not meet requirements because they lack a previous banking history – and MTBs who cannot operate without a centralized account to temporarily hold funds.

Difficulties to address the de-risking challenge

To avoid penalties and the related reputational damage, financial institutions in advanced economies have developed an increased sensitivity to the risks associated with correspondent banking. However, a major challenge in addressing the problem of unwarranted de-risking is the ambiguity surrounding the criteria for de-risking actions and a lack of uniformity in its implementation across institutions. Moreover, there seems to be no obligation on the part of international banks to provide a comprehensive explanation to regional banks for the withdrawal of their financial services.

This has proven to be a significant obstacle for the Caribbean and other small states, to appropriately address the issue as they are unable to determine the specific causes for the loss of the CBRs, despite considerable efforts on their part. The general experience of the Caribbean countries is that global banks have not been transparent and forthcoming on their reasons for terminating CBRs. According to regional authorities, when international banks withdraw their services, there is normally no explanation for the action taken, or in a few instances when a reason was cited, it was as a result of an “operational decision” being made by the international bank.

Consequently, given the lack of clarification for the heightened level of de-risking taking place, several possible reasons have been put forward, with the most obvious being possible deficiencies in the AML/CFT frameworks of the respondent banks in the Caribbean region. Unfortunately, this perception continues to prevail, despite being unsubstantiated, as no Caribbean country is currently subject to FATF’s monitoring process.

Beyond this primary rationale, another assumption for de-risking is that correspondent banks took the decision to sever high-risk relationships – such as the cash intensive businesses – and product lines that are not sufficiently profitable to justify the significant associated risk or compliance assessment requirements. However, this indiscriminate blanket approach to de-risking by foreign correspondents runs counter to the expectation that the global banks can and should assess the risk of their customers on a case by case basis.

A further reason cited is the fear of regulatory enforcement action that carries substantial litigation costs. This idea is by no means far-fetched as the penalties for US, UK and EU banks are exorbitant, even if they are found to have unknowingly facilitated money laundering and tax evasion. Other possible reasons for de-risking include, but are not limited to (( 1)) general retrenchment by global banks, ((2)) apprehension about possible reputational damage, ((3)) misinterpretation of the FATF standards on correspondent banking and customer due diligence, and ((4)) a domino effect caused by the actions by other international correspondent banks.

Possible way forward
De-risking thus appears to have been driven by a variety of factors. Given the ambiguity surrounding the de-risking process, explicit guidance to all relevant stakeholders is strongly needed. This guidance should be specific to the level of requirements and expectations, within a comprehensive and measurable framework under which the risk-based approach can be applied. There is also a need for a greater level of accountability from correspondent banks who withdraw their services, whereby they are mandated to provide tangible evidence that they undertook all the required measures, prior to withdrawing their services.

According to ” International Alliance of MTO Associations ” the expectations and responsibilities of correspondent banks in relation to sanctions and extraterritoriality also need to be defined. Clarification is essential on the responsibilities and extent of liability of correspondent banks, pertaining to sanctions and AML/CFT requirements, if they are operating in foreign countries and/or providing overseas correspondent banking facilities. Consideration of legislative changes to shift the liability of extraterritorial sanction and AML/CFT breaches to the entity immediately responsible for that breach as opposed to the correspondent bank itself was also put forward by the association.

Several possible actions to address the challenge of de-risking were also outlined at the Alliance for Financial Inclusion ( [[AFI]]) and G-24 roundtable in Peru October 12. They include:

  1. Central banks as regulators should be proactive, especially in terms of the guidance given to financial institutions, and move quickly to stem the tide when de-risking happens.
  2. Greater partnership among the IMF, World Bank, Financial Stability Board, G24, Alliance for Financial Inclusion and the Commonwealth Secretariat, is required to advocate for developing countries with regards to implementation of FATF’s risk-based approach. The issue has only started to be discussed at G20 meetings
  3. A safe harbour and/or “freeze” on de-risking actions should be instituted, until the various ongoing studies by international organizations are concluded. This will provide a clearer picture of the scale, drivers and impact of de-risking and put the relevant regulatory bodies in a more enlightened position, in order to implement appropriate risk-based policy solutions.
  4. A review of best practices among jurisdictions to build a “bottom-up” approach to strengthening AML/CFT regimes.
  5. Assistance for capacity building efforts, enabling countries to undertake mandatory natural risk assessments (NRSs) to more efficiently identify, assess and manage ML/FT risks.

Bottom line

The presence of CBRs is essential to small states for trade and investment. Given their dependence on CBRs with financial institutions in advanced economies, loss of these relationships as a result of de-risking can have severe and almost immediate implications on their macroeconomic stability and potentially result in financial destabilization, financial exclusion and ultimately economic collapse.

These countries depend on correspondent banking arrangements as they represent their lifeline with the world. The urgency of the matter cannot be over-emphasized, as the current efforts by the international community may not provide a viable solution in time to prevent the economic devastation of some countries, making it imperative that these efforts are accelerated, and/or some interim action is taken to ensure that the development and stability of these countries are preserved.

Otaviano Canuto is an Executive Director at the International Monetary Fund and Veronica Ramcharan is a Senior Adviser to the Executive Director. All opinions expressed here are their own and do not represent those of the IMF or of those governments Mr. Canuto represents at the IMF Board.

See also M&T Bank’s Integration Of Hudson City Bancorp Will Drive The Stock Lower on seekingalpha.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

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Guana Island Research Film Documents “French Grunt” Behaviors in the BVI

Posted on October 23, 2015 by Bruce

Fascinating link from Lianna Jarecki, the coordinator of the well-respected science programs at Guana Island, in the British Virgin Islands. Maybe it’s just the geek in me, but I really think these projects that convey how science is done are really important to STEM education, especially in small islands where “science” may seem to be exclusive to continental areas.

From: Lianna Jarecki <liannaj>

Subject: Guana Island Coral Reef Research Film

Date: October 23, 2015 at 12:45:06 PM EDT

Guana Science scientist Paul Sikkel came to Guana this past summer with documentary film-maker Jennifer Berglund (Harvard Museum) to produce educational videos of Paul’s research discoveries. The resulting video shows the daily migration of French Grunts to and from Guana’s White Bay reefs and the parasites that drive this migration, according to Paul’s research findings. All the footage is taken on Guana. The reef looks terrible, I know, but one of our replanted Elkhorn corals is shown. And Paul mentions his finding that more live corals equals fewer parasites.

The video can be viewed at https://vimeo.com/139517759

Jennifer is now working on a second video about Guana’s Marine Science Program.

Lianna

Posted in Biodiversity, Coral Reefs, Media, Science | Leave a comment

1st of 2 Annapolis Stories: Washington Post: Woman, two teenagers charged in what police call a love-triangle slaying

Posted on October 17, 2015 by Bruce

Woman, two teenagers charged in what police call a love-triangle slaying
The Md. mother enlisted the teens to plan the murder of her husband and their female housemate, officials say. http://wapo.st/1LdKSWZ

A note from Bruce Potter

Posted in Close to Home | Leave a comment