COMMENTARY: Banked, But for How Long?

Caribbean correspondent banking at a strategic inflection — and the convergence that is now reshaping the conversation.

By Fletcher St. Jean, MBA — Finance & Business Strategist | Advisor

In July 2025, the United States enacted the GENIUS Act, the first federal framework for payment stablecoins; by February 2026 the Office of the Comptroller of the Currency had issued the first comprehensive rule to implement it.

Visa, meanwhile, had begun settling international transactions in stablecoins, reaching a roughly US$4.5 billion annualized run rate by January 2026.

The U.S. Treasury has suggested stablecoin supply could approach US$3 trillion by 2030, and EY estimates these instruments could carry five to ten percent of all cross-border payments by then — between US$2.1 and US$4.2 trillion a year.

Any one of these would deserve the attention of anyone responsible for a Caribbean bank’s strategic direction. Taken together, they describe a commercial and regulatory environment that did not exist twelve months ago.

And they arrive alongside a decade of correspondent banking attrition the region has met with patience and sustained diplomacy.

This commentary — the second in the Caribbean Banking Series, following “The Cost of Money in the ECCU” — is offered in the same spirit as the parent platform, The Caribbean Ledger: as a contribution to the work the Eastern Caribbean Central Bank, the Central Bank of The Bahamas, the Bank of Jamaica, the Caribbean Development Bank, the Caribbean Association of Banks, CARICOM, and member governments have been leading since at least 2015.

It does not introduce that conversation; it tries to advance it — by being honest about why the region’s access is thinning, taking the title’s question seriously, and examining what the alternatives can and cannot do.

Why this is a growth question, not only a banking question

The region has set itself an explicit growth ambition.

The ECCB’s 2026–2031 strategic plan, launched in March 2026 under Governor Timothy Antoine’s “Big Push,” challenges the Eastern Caribbean Currency Union to double its GDP within a decade — a roughly seven-percent annual growth path against a current trajectory the Governor himself calls maintenance rather than transformation, nearer three percent.

The Caribbean Development Bank’s Strategic Plan 2026–2035, framed by President Daniel Best as a “decade of decision,” sets a parallel regional ambition. Both rest on an assumption that is easy to overlook: that the region is, and remains, bankable.

That assumption is exactly what de-risking puts in question — and the link runs straight to investment. As Governor Antoine has argued, without stability there is no confidence, and without confidence there is no investment and no sustained growth.

Foreign direct investment does not flow readily into a jurisdiction whose banks may struggle to clear U.S. dollars or repatriate returns. A correspondent panel that is thinning, costlier, and more concentrated is not only an operations problem; it is a drag on the cost of capital and on investor confidence — and therefore on the very roadmaps the region has set for itself. Reliable banking access is, in this sense, one of the enabling conditions of the Big Push: securing it is part of the work of delivering that ambition, and a natural place for the financial-services community to support the central banks and governments leading it.

The conversation we have been having for a decade

In November 2015, the World Bank published its first comprehensive study of the withdrawal of correspondent banking relationships from emerging markets — Withdrawal from Correspondent Banking: Where, Why, and What to Do About It. Its finding was blunt: de-risking, driven by rising compliance costs and the risk aversion of large global banks, was reducing financial access across whole regions, and the burden fell hardest on money transfer operators and on small economies — the Caribbean and the Pacific foremost among them. That single report explains why banking in the Caribbean has become so documentation-heavy and expensive to conduct. The region is not imagining the weight of compliance; it was identified, a decade ago, as the place where that weight would land most heavily.

A brief definition helps frame what follows. In a correspondent relationship, the respondent bank — the Caribbean institution — holds an account with a larger correspondent bank abroad in order to reach the international payment system, settle in U.S. dollars, and move funds across borders for its customers. When a correspondent withdraws, the respondent does not lose a vendor; it loses a road to the rest of the world.

By 2017, the Caribbean Association of Banks found that 21 of 23 surveyed banks across 12 countries had lost at least one correspondent relationship, with the Eastern Caribbean, Suriname, and Belize bearing disproportionate weight. The Financial Stability Board warned that the decline could become a systemic problem for the region.

The region has now known about this for more than ten years. The natural question a board should be asking is not only “how do we defend the relationships we have,” but “what is our action plan, and what proactive measures can we take, in the event of a correspondent bank run”: a correlated, rapid exit of remaining correspondents from which there is no quick recovery. A decade of advocacy has slowed the trend, not reversed it. Honesty about that is not criticism of the institutions doing the work; it is the starting point for the harder conversation.

Why the correspondent banks are leaving

To answer the title’s question, look closely at the decision a correspondent actually makes. The banks that have exited Caribbean relationships are not acting out of malice; they are responding to the cost of carrying a small respondent under modern anti-money-laundering standards — a cost that has moved in one direction for fifteen years. Three mechanics matter most.

The first is what compliance officers call KYCC — knowing your customer’s customer. A correspondent does not merely need to know the respondent bank; under current expectations it must be satisfied the respondent adequately knows, monitors, and can account for its own customers, including downstream institutions it serves. The correspondent is, in effect, underwriting the quality of the respondent’s entire customer-due-diligence program. Where that program has gaps — incomplete beneficial-ownership data, uneven transaction monitoring, weak documentation on higher-risk accounts — the correspondent inherits the exposure. Customer-due-diligence gaps at the respondent level are therefore not a local problem; they are precisely what drives a correspondent toward the exit.

The second is the economics of enhanced due diligence on a low-volume relationship. The cost of onboarding, monitoring, screening, and periodically re-reviewing a respondent is largely fixed. It does not fall because the respondent is small. So when a correspondent spreads that fixed cost across the modest transaction volume a small Caribbean bank generates, the per-transaction economics deteriorate quickly. This is the mechanism Prime Minister Mottley described with precision in her September 14, 2022 testimony to the U.S. House Committee on Financial Services: forty countries had lost more than 40% of their correspondent relationships, twenty — many in the Caribbean — had lost over half, and on the Bank for International Settlements’ count, eight countries could not receive payments at all and four could not send. Her central point bears repeating, with one honest qualification: in most cases this happened not because investigators had found material laundering in the banks that were cut, but because the fixed cost of additional monitoring — much of it triggered by FATF and FATF-style listing — falls disproportionately on small economies. That is the dominant pattern. It is not the whole of it, as the region’s own record shows.

The third mechanic is the FATF channel. When a jurisdiction lands on the FATF “grey list” of countries under increased monitoring, correspondents are expected to apply enhanced due diligence automatically; at the February 2026 plenary, that list ran to roughly two dozen jurisdictions. Grey-listing rarely reflects a finding that a country’s banks are laundering money — more often, technical deficiencies in a national framework. But the EDD it triggers raises the cost-to-serve, and for many correspondents the cleaner answer to higher cost is not to invest more in monitoring; it is to leave.

Belize is the instructive case, and an honest one. It lost roughly 83 to 87 percent of its correspondent relationships in 2015 and 2016 — the steepest collapse in the region — when Bank of America and others withdrew from its largest banks. That was not perception alone. Belize’s third-round mutual evaluation had left it grey-listed by the Caribbean Financial Action Task Force and, alongside Guyana, subject to a call for counter-measures over strategic AML/CFT deficiencies; a sizeable offshore banking sector and a very small economy did the rest. Documented framework weaknesses — not cost alone — were therefore part of the story in specific jurisdictions, even as the IMF found no clear regional correlation between AML compliance and the loss of correspondent banking. The coda matters just as much: by its 2025 fourth-round evaluation Belize was rated fully compliant on 38 of the FATF’s 40 recommendations, a turnaround that shows remediation restores standing. The lesson is not that the region is innocent or guilty; it is that fixing genuine deficiencies and resisting indiscriminate, cost-driven withdrawal are both part of the answer.

The signal in the Canadian banks’ retreat

The clearest evidence that this is not an abstract trend sits in the ownership of the region’s own banks. For a century, three Canadian institutions — RBC, Scotiabank, and CIBC — were fixtures of Caribbean banking. One by one, they have left. RBC sold its Jamaica business to Sagicor in 2014, Suriname to Republic in 2015, and in 2021 exited the Eastern Caribbean entirely, selling to a consortium of indigenous banks that included 1st National Bank of St Lucia and the Bank of Nevis; in 2024 it cut US$200 million of capital from its remaining Caribbean entity, fueling further exit speculation. Scotiabank sold operations across nine markets to Trinidad’s Republic Financial Holdings, and has since pared back in Panama, Costa Rica, and Colombia. And in May 2026, CIBC agreed to sell its controlling stake in CIBC Caribbean to Bermuda’s Butterfield in a US$1.8 billion transaction.

It is worth being precise about what this signals, because these were not marginal players. RBC, Scotiabank, and CIBC are themselves correspondent banks; Scotiabank’s regional presence, in particular, was a direct channel through which territories reached the international payment system. When institutions with a century of local knowledge and their own correspondent capability conclude that the risk-adjusted economics no longer justify staying, that is the de-risking thesis playing out at the level of ownership, not merely the level of an account. Two further signals matter. First, the buyers are regional and offshore players — Republic, Butterfield, indigenous consortiums — who must now secure their own correspondent relationships rather than inherit a Canadian parent’s global network. Second, regional regulators have at points blocked these sales on concentration and systemic-risk grounds, a sign of the region’s own unease about the consolidation under way. The map of who banks the Caribbean is being redrawn — and the region is, increasingly, banking itself.

The risk-perception multipliers

A correspondent’s exit decision is driven by cost, but cost is shaped by perceived risk — and three forces are pushing the region’s perceived risk upward in ways that compound the de-risking pressure. None of them implies wrongdoing by Caribbean banks. All of them make the correspondent’s spreadsheet look worse.

The first is structural, and quiet. A meaningful share of the region’s population is served not by commercial banks but by credit unions, which are large, trusted, and deeply rooted. Yet credit unions are generally not supervised directly by the central banks; they answer to national cooperative or financial-services regulators, and their AML/CFT profiles therefore vary across jurisdictions. Crucially, when a credit union needs to send or receive funds across a border, it typically does so through a commercial bank’s correspondent relationship. That traffic adds risk-weighted exposure to a relationship already under scrutiny, without the correspondent seeing into the credit union’s own controls. It is a structural feature of the regional system, hard to address from inside a single bank.

The second is the region’s geography in a shifting global drug trade, which I raise strictly as a driver of risk perception, not a characterization of the region. Global cocaine production reached record levels in the UNODC’s most recent assessment, rising roughly a third in a single year on Andean cultivation. As interdiction has intensified elsewhere, more of that volume has moved through Caribbean maritime corridors; U.S. Coast Guard cocaine seizures hit a service record of around 231,000 kilograms in fiscal 2025. For a correspondent’s risk committee abroad, none of this requires evidence of laundering in a respondent’s book to matter. It raises the ambient money-laundering risk the committee assigns to the region, and that perception is priced directly into the cost-to-serve. The regional response — UNODC container-control programs, national financial intelligence units — is substantial. But perception moves faster than remediation.

The third is the region’s long positioning at the center of the international tax-transparency agenda. Its history as a home to offshore financial centers keeps it permanently in the field of view of FATCA, the OECD Common Reporting Standard, the OECD’s Pillar Two global minimum tax, and the EU’s list of non-cooperative jurisdictions — updated as recently as February 2026, when the Turks and Caicos Islands were added and Trinidad and Tobago removed. Regional governments have largely done the substantial work of economic-substance legislation and information exchange they demand. The point is not to defend or contest any of it. It is that tax-transparency and AML/CFT compliance stack on the same small institutions, deepen the same documentation burden, and reinforce the same perception of a “high-attention” region — which is exactly what a correspondent prices.

The regulatory tide still rising — and what it means for “how long”

If the question is “banked, but for how long,” the most useful place to look is forward, at the regulatory pipeline that will define the cost of carrying a Caribbean respondent in 2027 and 2028. It is not loosening.

In the European Union, a new Anti-Money Laundering Authority became operational in Frankfurt on July 1, 2025; a single, directly applicable EU AML rulebook takes effect on July 10, 2027, with the Authority beginning direct supervision of selected high-risk institutions from 2028 and penalties reaching tens of millions of euro. In the United States, the GENIUS Act’s implementing rules are being written across the OCC, FDIC, Federal Reserve, NCUA, FinCEN, and Treasury through 2026, with FinCEN expected to specify fresh AML obligations for stablecoin issuers. The FATF continues its three-times-a-year listing cycle, and EDD on listed counterparties remains the default. The direction of travel is heavier, more harmonized, more automated supervision — which raises, not lowers, the cost a correspondent carries on a small respondent.

This is the substance behind a key point: the more consequential conversation now belongs as much with lawmakers and regulators as with the correspondent banks. Bank-to-bank dialogue can preserve an individual relationship. It cannot change the slope of the regulatory tide. That work — engagement with U.S. Treasury, with the EU institutions, with FATF and its Caribbean regional body — is where the region’s collective weight is best applied, and it is properly the domain of governments, central banks, and the bodies that convene them.

As for the correspondents’ own intentions: the public signals from the largest U.S. banks point to continued, selective rationalization of low-margin, high-compliance-cost relationships rather than re-expansion into them. No major U.S. correspondent has announced a strategic return to small-jurisdiction Caribbean banking. That is the honest answer to the title’s question. The region is banked today. On current trajectory, the relationships that remain will be fewer, costlier, and more concentrated — and the prudent assumption is not that the tide reverses, but that it keeps rising.

The roads out — and what they can actually carry

If the defensive posture is necessary but insufficient, what are the alternatives, and which of them are real for a Caribbean bank today?

Start with how the new rails actually work, because the difference from correspondent banking is the whole point. A conventional cross-border payment hops through a chain of correspondent banks, each holding balances with the next, each screening, each adding time and cost; settlement can take days. A stablecoin transfer collapses that chain. A stablecoin is a digital token designed to hold a fixed value — under the GENIUS Act, backed one-for-one by high-quality liquid reserves, audited, and subject to Bank Secrecy Act compliance. Value moves directly between two parties over a shared ledger and settles in seconds, with conversion handled where money enters and leaves the network. The intermediary chain — and much of its cost and delay — disappears. That is why real-economy stablecoin payments reached roughly US$400 billion in 2025, around sixty percent of its business-to-business.

But the honest question is whether any of this combats de-risking for a Caribbean bank — and the answer is “partly, not yet wholesale.” Consider the realistic options side by side.

Money transfer operators such as Western Union remain vital for remittances but are not a solution to the bank-level problem; they are themselves among the most de-risked entities in the system, dependent on the very bank accounts being withdrawn. Wise (formerly TransferWise) is cleverer: rather than move money across borders, it holds local accounts in many countries and matches offsetting flows. It is fast and cheap — but it is a retail and SME instrument, residency-restricted in much of the Caribbean, and itself a regulated entity performing the same customer due diligence. It relocates the KYC problem; it does not dissolve it.

Brazil’s PIX is the most instructive model. Built and operated by the central bank as open public infrastructure with mandatory interoperability, it now reaches over eighty percent of Brazil’s adult population. It shows what a publicly-owned regional rail can do to cost and speed — which is precisely the ambition behind the ECCU’s DCash evolution and the CARICOM Payments and Settlement System. But PIX is domestic-first; Brazil’s own cross-border extension leans on commercial partners and the BIS Project Nexus effort to interconnect national systems. The lesson is twofold: a regional rail can transform domestic and intra-regional payments, but the cross-border, U.S.-dollar-clearing problem still requires either a settlement asset or a Nexus-style interconnection.

This is where the region’s own experience becomes a strategic asset. The Bahamas Sand Dollar, the ECCU’s DCash, and Jamaica’s JAM-DEX gave the Caribbean more practical central-bank-digital-currency experience than almost any jurisdiction of its size. But it must be said plainly: a domestic CBDC does not, on its own, restore correspondent access. It is the foundation from which the region can engage the layer that does matter — GENIUS Act reciprocity and interoperable settlement. Section 18 of the GENIUS Act explicitly allows the U.S. Treasury to recognize overseas stablecoin regimes as comparable, opening a path for a coordinated Caribbean framework to interoperate with the U.S. system rather than stand outside it. Globally the frameworks are converging — Hong Kong’s licensing regime, Singapore’s rules, the EU’s MiCA. Those are usable by Caribbean banks not as off-the-shelf products but as templates and counterpart frameworks: the task is to build a comparable regime worth recognizing, and turnkey platforms — of the kind Fiserv now offers banks and credit unions to issue and handle digital assets — lower the cost of doing so.

From defense to design: five recommendations

If defense alone is insufficient, the region needs a design agenda. Five recommendations follow — offered as contributions to the work the region’s institutions are leading, not as instructions, and each requiring the detailed feasibility work no commentary can substitute for.

1. A Caribbean-owned bank with a United States presence. The most direct answer to a thinning correspondent panel is for the region to own the channel itself: a Caribbean-owned bank, chartered with a U.S. presence and clearing access, mandated to serve ECCU and CARICOM banks as a shared correspondent. Rather than each small respondent negotiating alone, the region would pool its volume, compliance investment, and bargaining power into one institution built to clear dollars for its members. It is a substantial undertaking — capital, U.S. regulatory approval, and a compliance program of the highest standard are prerequisites — but it converts a collective vulnerability into a collective asset, and the region’s AML/CFT expertise is equal to building it.

2. A standing Caribbean banking-advocacy arm in Washington. Bank-to-bank dialogue cannot change the rules; lawmakers can. The region should establish a dedicated, professionally staffed advocacy function whose sole mandate is to engage Washington — Treasury, the Congress, the regulators — for banking treatment that reflects the Caribbean’s actual risk profile, not its perceived one. CARICOM and the central banks have done this episodically, around hearings and summits; a permanent arm would make the case continuously, with data, where the rules are being written — turning periodic diplomacy into sustained representation.

3. Make the regional digital-currency stack work — with intention. The Caribbean built the Sand Dollar, DCash, and JAM-DEX ahead of almost everyone, then under-used them. The recommendation is purpose-driven adoption: an ECCB-led public-education and merchant-onboarding push that gives DCash and its successors real transactional weight, so the region’s digital-currency experience becomes operational capability rather than pilot history. Adoption is the precondition for what follows — a credible regional settlement layer and a seat at the table on cross-border interoperability both depend on rails the region’s own people actually use.

4. One Caribbean settlement layer, not siloed jurisdictions. Governor Antoine has framed the Big Push as one strategy, not seven silos. Payments should follow the same logic. A single, interoperable regional settlement layer — building on the CARICOM Payments and Settlement System and the region’s CBDC work — would let intra-regional payments clear without touching the correspondent rails under threat, and would present the outside world with one integrated counterpart rather than a dozen small ones. This is architecture the third part of this series will develop; the point here is that the silos are a choice, and a costly one.

5. Deepen intra-regional trade to reduce extra-regional dependence. The data is stark: intra-CARICOM trade has long sat in the low-to-mid teens as a share of the region’s total trade, well below the 25 percent target CARICOM itself set. Every dollar of trade that stays within the region is a dollar that need not traverse a fragile U.S.-dollar correspondent chain. Strengthening regional trade — and settling it on a regional rail — is therefore not only a growth strategy under the Big Push; it is a de-risking strategy. The two agendas are, in the end, one agenda.

An invitation to the conversation

The Caribbean has engaged the correspondent-banking question with patience and senior diplomacy for over a decade, and that work has produced real, if incremental, progress. What this commentary argues is that the context around it has shifted — and that the response now runs on two tracks: defend the relationships that remain, and build, by design, the capacity a rising regulatory tide and a maturing settlement architecture make necessary. The institutions are in place; Section 18 of the GENIUS Act offers a door; the rules of 2026 and 2027 will set standards the region can help shape or simply inherit. The choice to participate is open now.

This commentary is offered as a contribution to that work, and I welcome engagement with the region’s central banks, the CAB, CARICOM, bank boards, and private-sector partners on its strategic, financial, and operational dimensions. The series will continue with a third installment on the architecture of Caribbean financial integration.

About the Author

Fletcher St. Jean, MBA, is a finance and business strategist who works with Caribbean banks, regional governments, and private-sector partners on financial, operational, and strategic positioning through St. Jean & Company, his advisory firm registered in Nevis. He served as Managing Director of 1st National Bank St. Lucia Limited — the first non-St. Lucian to lead the 85-year-old institution — previously held executive roles at Citigroup, served as President of the Bankers Association of St. Lucia, and is a participant in the Wharton Executive Leadership Program. He writes an ongoing regional analytical series on ECCU and CARICOM finance, aviation, and economic integration.

The Caribbean Ledger

The Caribbean Ledger is an independent platform for original financial, economic, and strategic analysis of the Caribbean, launching at www.thecaribbeanledger.com in November 2026. This commentary is the second installment in the Caribbean Banking Series, following “The Cost of Money in the ECCU.” To inquire about advisory engagements, request the data behind the analysis, or register interest ahead of launch, please contact the author.

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