‘Grandfather’ of Antigua’s financial services leads the way in innovation

The new government was elected on the bold promise to make Antigua and Barbuda the “economic powerhouse of the Caribbean”. Prime Minister Gaston Browne has appointed you non-resident Ambassador to China, in order to help him achieve this vision. What would you say are the competitive advantages that Antigua and Barbuda possesses that give it the potential to become the economic powerhouse of the region if utilised properly?

Geographically we are the crossroads of the Caribbean, which is very convenient for a number of reasons. Our position is suitable for international business because we are four hours behind the markets in Europe at this time and we are relatively close to Latin America; this offers advantages that we can provide through our international services.

Our deep water harbour is well positioned to be a port of convenience. We are identifying and increasing the capacity of our harbour to serve as a hub for major cruise lines and as a centre for containerized commercial shipments. A substantial restructuring of the port is being undertaken with the assistance of the government of China, which will improve its capacity for cruise tourism and cargo services. We know that in Panama, for example, they are expanding their canal, so there will be the need to have ports on this side that will be able to meet the increased commercial services that will result from the growth in canal traffic. Transhipment of containerized goods that can be efficiently managed will be an economic asset.

We are also aware that there will be a growing need for containerized ships to start using LNG as their energy source, and we believe that our port, as it is developed, will be able to be a bunkering centre for those LNG-driven vessels. Convenience as the crossroads of the Caribbean, I think, can energize us to become the “powerhouse” that the prime minister has been speaking of.  

The government has hit the ground running, approving investments worth over $3 billion since being elected in June, notably in tourism and infrastructure.  Could you highlight the sectors that are most ripe for further investment and what can you say about the enabling environment here to American investors looking for opportunities?

There has to be investment in energy here. Everyone is concerned about reducing emissions and improving the health of our air. I think, in a small jurisdiction like ours, we are ideally placed for serious investors who want to provide services to allow us to go as green as possible, and as quickly as possible.

Antigua does not have all of the variations for alternative energy – it does not have the rivers that can provide that source of hydroelectric energy, or the ability to be able to take geothermal energy from deep inside of the earth. But, it does have the sun and the wind; however both of them are not necessarily sustainable, and there must be additional backing from other energy sources to make them reliable.

I think there are opportunities for energy related investments that can support converting Antigua into an LNG and renewable energy centre. We have a high cost of electricity, which will be an obstacle relative to the cost efficiency of our tourism product, as well as the provision of IT services and manufacturing. All these sectors have good investment potential but we will need to address the energy costs in order to make them very attractive.

Antigua’s image as an international financial centre was damaged somewhat by the fallout from the fraud at Stanford International Bank – particularly in the USA – while the image of offshore banking has suffered from the austerity that has followed the worldwide financial crisis, and the perception that the poor were being made to pay whilst the rich were hiding their money. What lessons were learnt locally from the Stanford scandal and how has Antigua and Barbuda emerged stronger as a jurisdiction from the twin challenges of Stanford and the financial crisis?  

You will find that the financial services sector in Antigua has lost all interest in seeking to attract clientele from the US. I think it is also true to say that the sector in general did not know that the Stanford Bank was actually marketing or seeking CDs or deposits in the US. We all thought it was focused on Central and Latin America. In a general sense one realizes that there is no real future in attracting account relationships from the US, other than seeking active corporations; which have largely gone, I would say, to the Irish jurisdiction and others.

For corporations, it is a matter of positioning yourself into legally operating environments that provide the best tax benefits. Some may say that is avoidance, and some may say that is appropriate tax planning on behalf of the board. There is a need to demystify some of the spectra that has been raised about international financial services, and the thought that they simply drain or attract money out of major financial markets; part of that fear comes from a lack of understanding of how the movement of money operates.

Jurisdictions like Antigua are not money centres, they have no clearing facilities, and they can only operate with the support of good correspondent banking relations. If I have a client that happened to be based in the US and was, for a good reason, doing some investment or work, and transfers $1million into his account which he can legitimately have at my bank – he has to declare it of course – where has the money gone? It hasn’t left the US. It has gone from his bank to our correspondent bank in the US in which we have an account, and it is being booked on that account; the money is still held in the treasury of that bank in the US; that bank has the benefit of its liquidity, and that US bank can still turn around and give a loan to a taxi driver in the US based on the liquidity that a foreign corresponding bank is providing them. It is a mistake to think that the money has gone offshore, but I am afraid that some of the early movies about offshore banking kind of generated that idea because there used to be the depiction of people taking raw cash in suitcases to the Caribbean.

Fifteen years ago, our jurisdiction became the first to prohibit its international banking services from accepting cash deposits, and we may still be the only one. There is no anonymous cash placed in our institutions, funds can only be deposited via an electronic transfer or instrument originating from the remitting bank, and that means that if there is a reason to investigate an account, the clear money trail is there. I believe that you will find there is not a bank manager anywhere in the world who can lay his head on a block and say that his institution has zero illicit funds; but, what that bank manager should be able to say is that if there are illicit funds at his institution, its compliance systems will identify them, and there will be a trail for an appropriate investigation to be pursued. That’s what we do.

It is surprising that the International Narcotics Control Strategy Report (INCSR) produced by the US State Department every year, has kept Antigua and Barbuda on its list of countries of primary concern for money laundering and financial crimes for ages. The asset base managed in Antigua in the post-Stanford period is only about US$2billion; do we warrant or merit a position as a primary money laundering concern? Can the size of our international assets under management be seen as a threat to the stability of worldwide financial services? I don’t personally think so, and our Supervisory Office to prevent drug trafficking, money laundering and financial crimes has been very effective, but the INCSR goal posts always seem to be moving.  

We have been very diligent in meeting and overcoming any of the AML/CTF deficiencies that were identified in reviews conducted by the Financial Action Task Force (FATF), and the jurisdiction graduated off of the FATF grey list, and is no longer being monitored. There was a recent demand by the Organization for Economic Co-operation and Development (OECD) relative to general compliance and transparency; and the government immediately addressed the legislation in parliament and ensured that our international business corporations are maintained in accordance with international best practices.

Our jurisdiction is a relatively small financial centre, but every bank must comply with international standards, including significant investments in software systems and human resources to manage AML/CTF risks and also meet the requirements of the Foreign Account Tax Compliance Act (FATCA).

The cost of conducting international financial services continues to increase, and the banks must grow their business to reach a satisfactory economy of scale. The sector does contribute to creating meaningful employment with higher skill sets and professional support services.  Whilst we are no longer seeking to attract US clients, we want to welcome any serious and legitimate business seeking a sovereign, democratic and stable jurisdiction to conduct its international business services and manage its wealth portfolio.

Antigua and Barbuda is opening up its doors to more business with Latin America, Asia, and Europe; I think that we provide excellent opportunities for businesses and Latin American clients whose own jurisdictions are not conducive to international commerce, and are seeking banking services to support their requirements for buying and selling commodities. As commerce continues to grow between the Caribbean and China, Global Bank of Commerce has invested in the provision of China’s card services to its clients, which help to facilitate online payments to Chinese merchants. The bank is issuing Union Pay International cards and also facilitating transactions by Asian visitors at tourism-related merchants.

The government has also pledged to encourage the creation of new financial services, such as payment services and technology-driven solutions. Global Bank of Commerce, and your affiliate, the Global Processing Centre, have been at the forefront of technological innovation in banking here in Antigua for many years. SugaPay is one of your latest innovations that is being heavily promoted. What is the appeal of the SugaPay system and do you see the potential for this to expand into the wider region and beyond?

Our financial group is not simply all about capturing deposits. There is no reason why the investments that we make should not be used for improving financial services domestically. That is why we branched out and invested in other local banks, the Global Processing Centre, and SugaPay. All of these investments can work together with the objective of improving Caribbean lifestyles and making payments more convenient.

Everything evolves in this world, and I think that in the Caribbean we have generally been lazy in innovation; the banking sector internationally has also been lazy in innovation. The last major innovation that the banking sector undertook was when it developed Visa/MasterCard. Since then, how innovative have we been in dealing with payments? PayPal has done that, iZettle has done that, ApplePay is doing that on their phones, where are the banks? Well, Mr. Bank, you have abdicated your responsibility, and these are the entities now eating your lunch. Why can’t we innovate and demonstrate that we can produce home-grown payment solutions here in the Caribbean?

In order to drive financial services you must have a financial processing centre to manage electronic financial transactions, and our banking group has made that investment; we have a centre that is connected into gateways that can process Visa and MasterCard transactions, and now we have a direct integration with China’s Union Pay International. If you are driving a rental car around Antigua you will notice that the gas stations will not take your cards; you have to pay by cash now because the retail of gas has a mandatory small mark-up cap, and if you are going to use a branded card the acquiring bank is going to charge you in the region of 3-4%. They need a payment solution to get them away from risky cash transactions, without disrupting their business.

In a World Bank’s “Doing Business” Report, it says the average Antiguan spends something like 207 hours a year paying taxes. This is because there is no convenient payment system and the payer must either take a check or cash and wait in line for a long time to pay the bill. Everybody recognizes that this is a waste of time, and it is costing efficiency in the labour market.

Our group considered the options and initiated the research and investment needed to create an     alternative payment solution, which we branded as SugaPay – “the sweetest way to pay”. It is a marriage between your payment card and your mobile phone which delivers trusted and convenient payment services. The plastic card can be loaded with a stored value that is automatically seen and registered on your designated phone. Every card transaction is seen on your phone, providing a virtual bank account and alerting the cardholder of its use. The phone can also originate transactions for payments and receive receipts. In this way, SugaPay can be safely used for card-present and card-not-present transactions, enabling the convenience of online payments for government taxes as well as bill payments and event tickets. We also provide a Smartphone Mobile Terminal that enables micro, small and medium sized vendors to offer merchant services to SugaPay card holders. In a sense PayPal has done that, and there is nothing that PayPal is doing that we cannot do with SugaPay. It is our own home-developed payment system. We are able to provide ecommerce at a greatly reduced “merchant discount rate” compared to the rate used for branded cards.  At this time we are doing integrations with different departments of government and establishing a broad cross-section of merchants.

We expect to demonstrate that it is a model for alternative payment services in Antigua, and we are already seeing very good interest from all the Caribbean islands. We are noting special interest from credit unions in the region, and we believe that SugaPay opens new opportunities for the micro and small sectors to participate more safely with commercial transactions.

We expect that this SugaPay payment solution service will become popular, improve the safety and convenience of general payments, and reduce the risk involved in carrying or receiving cash. Once you have got the circulation of this card and payment service fully operational, then you can look towards improving the efficiency and cost of diaspora remittances. If you have a delivery system that can provide remittances at a more efficient and convenient cost, even after managing all of the AML/CFT requirements for fund transfer security, it will provide a much needed service within our Caribbean communities.      

You are the figurehead of international banking here in Antigua, but also a family man. We understand your two adult children also work for the business. What are the most important values instilled in them, and indeed all your employees, that have helped the business grow to its current prominent position?

I am a person of strong faith and a family man. I treat our group of companies as my extended family. I try to encourage family values within my work family, explaining that in every job that I have undertaken – and I have done many – I have treated my work as if I owned the business. If you do not enjoy what you are doing you should move on because you have to enjoy your workday, and you have to value it as if it is your own business and ensure that you will go the extra mile to make it successful. It is that kind of commitment that everyone needs to make in order to grow a business.