Financial Crime World

Banks Face Challenges in Preventing Financial Crime in Trinidad and Tobago

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Digital Finance Agenda in Full Swing

Trinidad and Tobago continues its journey towards a cashless society, but despite efforts by the government to modernize policies and stimulate digital payment products, the country’s banks face numerous challenges in preventing financial crime. The Minister of Finance, Honourable Colm Imbert, has emphasized the commitment to the digital finance agenda during a recent EU-UNCDF workshop.

Strengthening the Regulatory Landscape

Recent efforts have led to significant strides in modernizing policies and stimulating the deployment of digital payment products. The country’s payment landscape is characterized by cash usage, but with high 3G and 4G coverage, and well-developed telecommunications systems, 85% of the population have access to the internet.

The legal and regulatory landscape has improved with the introduction of policies such as:

  • Draft E-Money Policy (2018): This policy aims to regulate e-money issuers and ensure their compliance with anti-money laundering regulations.
  • FinTech Policy (2019): This policy seeks to promote the development and adoption of FinTech solutions in Trinidad and Tobago.
  • E-Money Issuer Order (2020): This order requires e-money issuers to obtain a license from the Central Bank before operating in the country.
  • Simplified Due Diligence Requirements (2021): These requirements aim to reduce the administrative burden on financial institutions while ensuring they comply with anti-money laundering regulations.

Regulatory Innovation Hub

The Central Bank, Security Exchange Commission, and Financial Intelligence Unit have joined forces to establish a Regulatory Innovation Hub (The Hub) which serves as a central point of contact for fintechs. The Hub aims to promote innovation in the financial sector by providing a platform for fintechs to develop, test, and scale their solutions.

Challenges Facing Banks

Despite these efforts, banks in Trinidad and Tobago still face challenges in preventing financial crime. These include:

  • Lack of digital payment infrastructure: Non-bank institutions such as credit unions and e-money issuers do not yet have direct access to certain payment infrastructures.
  • Risk-based approaches: Flexibility and risk mitigation during the licensing process of financial technologies hold promise for financial inclusion while ensuring stability of the financial system.
  • Cyber resilience: Collaboration mechanisms between the financial sector and telecom regulators must be formalized to increase the cyber resilience of digital finance.

Solutions

To overcome these challenges, the government can:

  • Designate a secretariat for drafting digital finance strategies: This agency would house National Digital Financial Inclusion Surveys and establish Financial Inclusion Roadmaps on behalf of the nation with clear goals and targets.
  • Facilitate open payment systems: The government can take a leading role in facilitating open payment systems and infrastructures which can increase the efficiency of payment transactions and lower transaction costs.
  • Review financial consumer protection framework: A review of the current financial consumer protection framework can identify risks posed by emerging digital finance business models.

By establishing relevant strategies, building adequate data infrastructures, and strengthening stakeholder engagement, the country will foster cooperation, boost the economy, and improve access to digital financial services for everyone.