This Research Paper analyses the developmental issue of financial de-risking within the framework of Small Island Developing States (SIDS) in the Carib-bean. The concepts of economic vulnerability as well as resilience are introduced. This is because the main argument of this Research Paper is that the rise of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) regula-tions, within the developed economies of the world, has prompted global Finan-cial Institutions to cut or significantly reduced business and financial services’ provision to most of the SIDS in the Caribbean. Such phenomenon is increas-ingly known as financial de-risking. This Research Paper also empirically tests the existence of financial de-risking in the Caribbean by means and measurement of decreasing corresponding banking relationships through declining SWIFT in-ter-banking messages as well as the net risk transfers that major North American Financial Institutions use as means of guarantees and protection against doing business in the Caribbean. The effects of financial de-risking are analysed in-depth. As such, a case-study is also brought to the analysis whereby the Cayman Islands present a paradox of being a leading Off-Shore Financial Centre (OFC) provisioning niche financial services to wealthy and multinational clients while also suffering from decreased financial and capital accessibility for its local pop-ulation as well as Small and Medium-Sized Businesses. This Research Paper fi-nalizes with relevant conclusions. It also proposes further policy inquiries by the use of Distributed Ledger Technologies in order to prevent massive risk-averse-ness by major Financial Institutions as well as to have open communications with financial regulators.

Additional Metadata
Keywords Financial de-risking, Small Island Developing States (SIDS), Caribbean economies, financial compliance and regulation
Thesis Advisor Nicholas, Howard
Persistent URL
Series Economics of Development (ECD)
Veintimilla, Esteban. (2018, December 17). De-risking: between money paradise and institutional blast. Economics of Development (ECD). Retrieved from