IMF team and representatives of financial institution on setting up corresponding bank relationship with POB in the country.
By Alfred Sasako
A team from the International Monetary Fund (IMF) as well as representatives from the financial institution the Central Bank of Solomon Islands is consulting on the issue of setting up a corresponding banking relationship with Pan Oceania Bank (POB) have arrived in the country.
While CBSI Governor Denton Rarawa has downplayed the significance of the visit, officials told Island Sun the Government is worried, particularly about the outstanding issue of corresponding banking relationship (CBR) involving POB.
“What worries the Government is the deadline given CBSI by the Reserve Bank of the United States to sort out the corresponding banking relationship matter before December this year.
“Once the issue is not resolved, Solomon Islands can be blacklisted. This means that we won’t be able to receive United States dollars for our log exports. And that is the fear because the government relies heavily for its revenue from logging receipts,” one official said.
The representatives of the financial institution are actually here to see whether POB is complying or not and the CBSI as the regulator is doing about it, the official said.
Their visit, unlike the IMF team, is reportedly part of a Pacific-wide visit to check compliance by commercial banks such as POB on logging activities and exports.
The cost of the consultation is said to be four million sterling pounds or about SBD52 million.
The situation in Solomon Islands is quite problematic in that logging companies that are not registered are harvesting logs without licences and that POB could be unknowingly accepting their businesses.
There is a moratorium on new logging licences, but it would appear the Ministry of Forestry and Research continues to issue licences in defiance of the moratorium.
In response to an email yesterday, Governor Rarawa said:
“Thank you for your email. I am not aware of any international audit of banks taking logging proceeds underway in the country. But I know there is an IMF Article IV mission currently in the country holding consultations with key stakeholders including CBSI and POB.
“I am also aware that a team from the financial institution we are consulting to set up a correspondent banking relationship (CBR) with POB will be in the country in the next few days to assess POB’s AML/CFT compliance protocols. We will meet with them later this week to hold further consultations,” Mr Rarawa said.