The Single ICT Space - The STAR Businessweek by STAR Publishing

THE STAR Businessweek SEPTEMBER 22, 2018

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The Single ICT Space

CARICOM moves ahead with plans for a harmonised ICT network throughout the Caribbean By Catherine Morris, STAR Businessweek Correspondent

Taiwan’s fishing industry faces claims of ‘hell’ on the high seas For sailors aboard the rickety fishing vessel Fuh Sheng 11, life on the waters off South Africa, 10,000km from the boat’s home port in Taiwan, was a living “hell” Page 3

It may be a single region, but there’s a lot of digital diversity in the Caribbean. While some countries have embraced technological trends and are feeling the benefits in their economies, communities and infrastructure, others lag behind, barely able to maintain their outdated networks. Continued on page 4

We cannot fight cross-border money laundering with local tools Money laundering is never far from the headlines. Last week ING in the Netherlands and the Danish Group Danske Bank were the lenders who found themselves in the spotlight Page 7

The star businessweek

SEPTEMBER 22, 2018

The STAR Businessweek BY Christian Wayne – Editor at Large

Hello dear readers, I’m writing this week’s editorial from the heart of Detroit, Michigan—affectionately known to many Americans as Motor City and the birthplace of globally recognized, cultural icons like Aretha Franklin, Smokey Robinson, Stevie Wonder and Eminem, and home to titans of American industry like General Motors and Ford. As The STAR Businessweek readers may know, TeleCarib Labs, a local ecosystem development organisation, of which I am the Co-Founder & Executive Director, is designing educational programming for Saint Lucia aimed at supporting our local entrepreneurs who are focused on making their communities better places to live, learn and work. While it may not be apparent at first blush, the city of Detroit and the island of Saint Lucia share common threads in their journeys towards (re)development, economic (re)vitalization, and diversification. In 2013 the city of Detroit filed for Chapter 9 bankruptcy, the largest municipal bankruptcy in American history, signalling a cratering of the city’s traditional economic base of automotive manufacturing and ushering in skyrocketing unemployment, a severe flight of employers and skilled workers, resulting in tens of thousands of abandoned buildings, vacant lots and general municipal dilapidation littered throughout the city. It’s an eerily similar story of the crash of Saint Lucia’s banana industry, a testament to the risks of mono-economies like our tourism-dependent one. Though there’s still significant work to be done, the city and its community have been rallying over the past few years to reinvigorate the area and shift the narrative—illustrating to the world that Detroit is back! While the progress so far has been humble at best, pockets

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of success have been achieved. How? Through a broad methodology known as ecosystem development. We’ve discussed this methodology previously in The STAR Businessweek but, in brief, ecosystem development relies on a toolkit of strategies and tactics aimed at leveraging a particular geographic area’s existing resources to stimulate (or jumpstart) sustainable economic growth. One important category of stakeholders in this methodology is known as ecosystem builders—organisations working specifically to aggregate various economic actors into mutually beneficial relationships in the hopes of spurring growth among them. For example, I’m currently working out of large co-working space in downtown Detroit, called TechTown. The organisation describes itself as Detroit’s entrepreneurship hub. Housed in a former abandoned fivestorey office building, the non-profit organisation acts as meeting and office space for the city’s hustlers—of various ages, ethnicities and industries—while also acting as a platform to nourish those hustlers with resources of various kinds, all designed to facilitate their growth and sustainability. TechTown’s impact so far has been admirable. While a small, refurbished office building in a large industrial city like Detroit may not be much to crow about, between 2007 and 2016 TechTown has served more than 1,800 companies. Those 1,800 companies have gone on to create nearly 1,300 additional jobs in the city and raise more than US$120 million in start-up capital. And TechTown is only one of many other stakeholders in Detroit’s wider ecosystem. Imagine if Saint Lucia’s business community and public sector were motivated enough to support a similar, localized initiative. Food for thought: while I’m definitely a proponent of Saint Lucia becoming more globalized and hosting foreign companies, the economic calculus of essentially ‘paying for jobs’ through fiscal incentives and tax holidays is likely far more costly to taxpayers when compared to supporting a fledgling local entrepreneur through mentorship, the provision of subsidized workspace and low-cost financing. If this sounds like something that interests you, reach out to us at info@telecarib.com with your thoughts. Be sure to check out our cover story this week on CARICOM’s initiative known as the Single ICT Space, starting on page 1!

It’s Nothing Personal. It’s Business. Stay connected with us at: Web: www.stluciastar.com Social: www.facebook.com/stluciastar Email: starbusinessweek@stluciastar.com

Shipwrecks in the Modern Era

A New Sunken Treasure: The Modern Value of Shipwrecks to Caribbean Business By Ed Kennedy, STAR Businessweek Correspondent

The Lesleen M shipwreck off the coast of Soufriere, Saint Lucia. Sunk in 1985, the wreck acts as an artificial reef to support the underwater ecosystem while doubling as a tourism attraction for divers

hipwrecks have the power to capture the imagination like few other pieces of history. Old ships, lying at the bottom of the sea, that are today sailed over by newer vessels, careening over the waters where the fallen found their end. The wrecks may reside down deep, unmoving and often untouched, but they are not forgotten, and are so often the source of passionate interest: the historians who research their stories, treasure hunters who seek their riches, and even diving groups who want to see in the depths something from our world topside that once crested along the waves. For many years shipwrecks held interest but engagement with them was limited by the existing technology. Now, in an era of digital and global economy, there is a totally new dynamic when it comes to the world of shipwrecks. New gadgets, new communications, new financing opportunities and, ultimately, a whole new era in which the world above can engage with what lies below. So what is the state of the shipwreck community today? And how may Caribbean businesses maximise their opportunities in this space? Let’s look now in depth.

Looking Up on Looking Down

As discussed previously in The STAR Businessweek, the Caribbean has not only

benefitted from the emergence of advances in maritime technology on Earth, but also satellite technology from above. Before his death in 2004, the work of American NASA astronaut Gordon Cooper, in mapping Caribbean waters while he was in orbit, was ultimately credited with the discovery of a shipwreck off the Bahamas in the middle of this year. This event was a vivid representation of the accuracy, precision and advances of technology seen within the world of imagery, satellite technology and mapping. As an astronaut, Cooper had access to technology that would be elusive to those of us on Earth. But even today, armchair explorers sit at home and use Google Earth as they seek to find, in a hint across the waves shown via digital imagery, what may lie beneath. Despite the trite idea of this popular hobby, real discoveries have been found around the world in all sorts of areas, thanks to amateuer sleuths. So, too, the digital communities that have popped up around them, ensuring that productive and proactive discussion of shipwrecks is no longer confined to an annual convention at a local conference centre, but instead can be done perpetually and globally. Continued on page 5

Taiwan

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SEPTEMBER 22, 2018

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Taiwan’s fishing industry faces claims of ‘hell’ on the high seas Shark finning and mistreatment of migrant sailors continue, according to report By Edward White in Taipei and Nicolle Liu in Hong Kong, FT Correspondents

or sailors aboard the rickety fishing vessel Fuh Sheng 11, life on the waters off South Africa, 10,000km from the boat’s home port in Taiwan, was a living “hell”. The captain was alleged to have handed down beatings and forced the crew to work up to 22 hours a day while insects infested their cramped sleeping and eating quarters. Out on the high seas, the men said, protected sharks were caught and stripped of their fins. The 27-man, mostly-Indonesian crew’s ordeal—documented in a probe by Environmental Justice Foundation (EJF), a British non-governmental organisation— not only suggests that labour abuse and environmental pillage still plague the global fisheries business, it also signals that an overhaul of Taiwan’s laws and closer international monitoring have failed to rein in the industry’s darker side, environmental experts said. “For all Indonesian fishermen, I hope they don’t experience what I’ve experienced,” one crew member told the EJF, which on Thursday published its investigation into the episode. The Fuh Sheng No 11 is one of an estimated 1,100 Taiwan-flagged distantwater fishing vessels that comprise the world’s second-largest long-distance fishing fleet, behind China. While much of Taiwan’s industry by value is concentrated in the Pacific, where Taiwanese longline boats target tuna, hundreds of boats spread across waters from Fiji to the Falklands. The vessels are manned by tens of thousands of south-east Asian workers.

The Fuh Sheng 11, declared ‘unseaworthy’ by South African officials and dry docked for repairs in Cape Town

Government estimates put the number of migrant fishermen at 30,000 while NGOs estimate that the figure tops 100,000. Taiwan in 2017 overhauled its fishing laws, beefed up funding of the industry regulator and increased penalties for breaches following years of international pressure to curtail human rights abuses and overfishing. Lin Ding-rong, director of deep sea fisheries at Taiwan’s Fisheries Agency, which manages the country’s fishing practices, said that new electronic systems monitored vessels’ positions every hour and logged daily catch reports. Authorities are now exceeding international standards for the frequency of inspections and have boosted worker support. “I believe Taiwan’s fishing fleet is more transparent than before,” Mr Lin said. “The new regulations have done a lot to enhance and protect the right of fishing vessels’ crews.” The European Commission, which has threatened to sanction Taiwan’s fishing industry, has acknowledged “great efforts

done by the Taiwanese authorities to reform their fisheries policy”. However, the testimonials from the Fuh Sheng No 11 crew given to EJF and complaints made to South African officials suggest a sharp divide between what authorities say and what is happening at sea. When the ship arrived in Cape Town in May, it was sharply listing, lifebuoys were rotten and anchors did not work, according to a South African Maritime Authority report. It was declared unseaworthy and the crew was temporarily removed. Yang Yen-rong, proprietor of Fuh Sheng Fishery that owned the Fuh Sheng No 11, confirmed that the vessel had caught and finned sharks — stripping sharks on vessels is illegal in Taiwan — but denied allegations of physical abuse and excessive working hours, and blamed the poor hygienic conditions on the workers. “The Indonesian workers are making things up,” Mr Yang said, adding that he had since sold the Fuh Sheng No 11.

Poor treatment of fishermen and illegal contracting arrangements is still widespread, said Allison Lee, founder of the only union representing migrant fishermen in Taiwan. “The new law is useless,” said Ms Lee. “They don’t care about the people.” The Fuh Sheng No 11 crew was promised pay of $300 a month, less than Taiwan’s minimum wage of $450 a month, according to contracts obtained by EJF. They also had to make deductions to pay back a guarantee to an employment broker. “The use of significant salary deductions creates bonded labour conditions, making it difficult or impossible for crew to leave and therefore vulnerable to physical and other abuse,” the EJF said in its report. Contracts for migrant workers on other Taiwanese-owned vessels, seen by the Financial Times, similarly reveal pay below the minimum wage, brokers deducting employment guarantee fees, and clauses specifying that the bodies of deceased workers may not be repatriated, which in practice means bodies are dumped into the ocean. Low-cost, high-volume operations were driven by “the relentless pressure of constant global demand for huge quantities of cheap seafood”, Greenpeace said of the long-distance fishing model. EJF urged Taiwan to review the measures in place by the Fisheries Agency to detect and counter human rights transgressions. “The abuses suffered on this vessel are appalling and completely unacceptable,” said Max Schmid, EJF deputy director. Mr Lin, from Taiwan’s fishing regulator, said that investigations into the Fu Sheng 11 were continuing but conceded that oversight of the industry remained problematic. “You cannot prevent bad guys doing bad things,” he said. “The role of the government is to use every effort to control or monitor our fishing vessels, it doesn’t mean that wrongdoing won’t happen any more.”

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SEPTEMBER 22, 2018

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The Single ICT Space Continued from page 1

CARICOM hopes to address this issue with the Single ICT Space, an ambitious plan to bring all member states up to the same level, harmonising legislation and policy throughout the islands and encouraging investment, competition and growth.

What is the Single ICT Space?

CARICOM first proposed a single ICT regime in 2011 as part of discussions around a regional digital strategy. It was thought that a unified network would support CARICOM’s Single Market and Economy, providing a digital layer to the existing framework. The idea passed through various levels of bureaucracy until it was finally vetted and approved by the CARICOM Heads of Government in February 2017, giving stakeholders the impetus to move forward with the goal of completing the roadmap by the end of 2022. The roadmap has four key objectives: harmonising policy, regulatory and legal regimes, creating a robust broadband infrastructure, establishing common frameworks for government, providers and consumers, and promoting secure technology and management systems. Speaking to ICTPulse, Deputy Programme Manager for ICT at the CARICOM Secretariat, Jennifer Britton characterised the Single ICT Space as “an attempt to unify our ICT market and create an ICT sector where all the countries benefit [so we can] support investors both inside and outside of the community”. “We have always worked as a region, in the sense that the stronger will bring the weaker ones along. It’s not going to do away with all the good things countries are already doing but will build on those,” she added.

Getting up to speed

Removing regional borders in the ICT environment requires every nation to meet a common standard. With some nations more mature in their ICT development than others, there is a concern that those at the

back of the pack will slow growth. Saint Lucia has been slow to make progress in its ICT capability but there have been recent efforts to address the digital divide. In 2015 the government launched a partnership with Taiwan to deliver the US$4m Government Island-wide Network (GINet) project which will increase internet penetration. Offering consumers free or low-cost internet services, GINet began implementation in May with the Canaries wifi zone and has since spread over the island, with the aim of creating 663 hotspots in five districts. The concept of a single ICT network is already a familiar one for Saint Lucia, and its Eastern Caribbean neighbours. Established in 2000, the Eastern Caribbean Telecommunications Authority (ECTEL) sought to harmonise the ICT environment among its five member states: Dominica, Grenada, St Kitts and Nevis, St Vincent and the Grenadines and Saint Lucia. Local regulators in these countries work with ECTEL to foster a common approach to policies, tariffs and ICT frameworks. This has given service providers and consumers a simplified and consistent system among the Eastern states, as well as providing operators in the sector with a united voice in regional and international discussions.

Projected benefits

Since the Single ICT Space roadmap was approved in February 2017, CARICOM has been working with the Caribbean Telecommunications Union to implement the strategy. CARICOM’s Council on Trade and Economic Development, which has responsibility for the initiative, met in Guyana in June to discuss sectoral linkages through ICT, ICT disaster risk management and cyber security. The Council has committed to meet twice a year to review progress on the Single ICT Space and will convene again in the last quarter of the year. A Single ICT Space in the region would have huge repercussions on almost every aspect of life in the Caribbean, from the

Caribbean Community (CARICOM) Minsters of Information and Communications Technologies have endorsed the roadmap for the region’s Single ICT Space. From left: ASG, Trade and Economic Integration, Mr. Joseph Cox; Chair of the Meeting, Minister Guy Joseph and Deputy Programme Manager, ICT4D, CARICOM Secretariat, Ms. Jennifer Britton

way citizens interact with government to how businesses deliver goods and trade across borders. Education, healthcare, transportation and manufacturing—every segment of society can benefit from enhanced ICT capability. A redesigned telecommunications landscape will not only allow providers to offer better and more diverse services, it can also reduce costs, eliminating an important barrer to ICT uptake. Negotiations are currently ongoing to

remove roaming rates on VOIP, with CARICOM hoping to incentivise operators to write-off their roaming revenues. A more harmonised Caribbean is a more competitive Caribbean. Access to a high-quality network would streamline government processes, improve the ease of doing business in the region, facilitate cross-border e-commerce, create a modern workforce at ease with technological processes and strengthen the current cybersecurity protections. All of which

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SEPTEMBER 22, 2018

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Shipwrecks in the Modern Era

A New Sunken Treasure: The Modern Value of Shipwrecks to Caribbean Business

Continued from page 2

‘Who owns this sunken ship?’

While there is much promise in this space, the many complications that are also involved when it comes to shipwrecks today, need to be recognized. These are seen across many facets of the community. Unquestionably, it is terrific for ship hunters to discover a shipwreck that has been long lost, especially if it comes with the promise of new riches, whether owed to the ship’s onboard treasure or simply the prestige and media coverage that can come with having found a historic relic. Yet this clear run through to great fortunes from the seafloor really only comes in the absence of a competing claim to the shipwreck. Unsurprisingly, this happens for ships of value. After all, just because someone has lost something, that doesn’t mean that it is, by default, the property of another, once found. Many governments may give a cursory pat on the back to those who find a ship long lost from the ports, but then ultimately they lay claim to the ship. Even the most well-funded treasure hunters can quickly find themselves fundamentally outpaced in legal firepower by a sovereign government making its claim.

Teething Pains of New Technology will make the Caribbean better able to economically compete on the world stage. But installing a whole new ICT ecosystem will not be easy and stakeholders will have to move quickly to keep up with the dynamic IT arena. Establishing the Single ICT Space will require intense regional and institutional collaboration, creative leadership and an enhanced level of public awareness as CARICOM strives to make the Caribbean a community of digital citizens.

It is also in the area of funding that we have seen the more contentious elements of the crypto world on full parade. Understandably, the business model that says to would-be crypto investors, “Invest in our shipwreck crypto now, and then when we find sunken riches, you’ll be rewarded!” appeals to many, doubtless enticed by not only the prospect of financial returns, but the excitement and romance of the adventure.

The Daini Koyomaru wreck, located one mile further offshore from the Lesleen M wreck, is a Japanese dredger that was sunk in 1996 in close proximity to an existing reef patch in hopes of spurring further reef growth while also acting as a dive site for advanced scuba divers

Sometimes there have even been claims that the enterprise knows where a ship is, and its value, and just needs an initial upfront round of funding to organise a recovery. The fallout from the investigation of the Shinjin Group—a South Korean crypto venture that alleged it had found a sunken warship, before it was revealed to be a scam operation— was illustrative of the downside of a new digital potential in this arena. While the rise of the digital economy and our global reach in communications has made the world smaller (and so often for the better when it comes to researching and recovering shipwrecks), it’s also given rise to the potential for new exploitation and scams. This is not confined to shipwrecks but it does mean that its lure, even as a source of ‘fool’s gold’, can be packaged in a way that is very deceptive.

Going Deeper

For aspiring Caribbean businesses the advances in technology represent a new opportunity here. While the region’s longstanding links to pirate history— most notably seen in recent years with the success of the blockbuster Pirates of the Caribbean franchise—show there is certainly a marketability here, it is also an era that is ripe for a new form of business. Encouraging the serious endeavours

in this space, such as devoted explorers and researchers, needs to reconcile with the reality that there is a new momentum in this community owing to the power and possibilities of emerging technology. While amatuer sleuths may chiefly sit at home searching Google Earth for a shipwreck, enticing them to the region for an annual event where they can sail the waters of shipwreck valleys for real, offers a great potential growth avenue. Even if local entrepreneurs wanted to, applying a hard and fast rule to the merits of a particular technology would be hard; the scandal of the Shinjin Group showed the potential for abuses. Just the same, if in future there was a new business in this space, entrepreneurs may find that acquiring funding from investors could be difficult via traditional channels such as banks. Seeking it via non-traditional financing channels, like a crypto Initial Coin Offering (ICO), could offer a path. Should these enterprising shipwreck enthusiasts have legitimate expertise, decrying all shipwreck ICOs by default would be wrong. What is certain is that the Caribbean’s history, coastal features and strong supporting industries (chiefly in banking and tourism) make it a natural domain to entice the shipwreck community to build here.

Clear Sailing Ahead

Ultimately, the most exciting consideration of the future potential of the shipwreck community and its business operations in the region is the ability for local entrepreneurs to project globally. With an estimated 3 million shipwrecks located around the world—and around less than 1% of them having being explored— local expertise and businesses built here could find a customer base not only locally, but globally. That’s why local entrepreneurs who seek a new engagement with the shipwreck community must recognise that embracing the future with precision is the best way to derive new value from the past, on land and in water.

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Corporate Social Responsibility

BETTER AIR QUALITY AND BRIGHTER ENVIRONMENT FOR AVE MARIA PRIMARY SCHOOLERS

he new school year has opened for Ave Maria Girls’ Primary School students and their teachers with improved air circulation, equipment, cooling fans and a more aesthetically stimulating environment in the school’s library. The scheduling of the donation and library upgrades coincided with the observance of International Literacy Day earlier this month. The Ave Maria Girls’ Primary School project was the second CIBC FirstCaribbean International Bank’s Adopt-A-Cause activity for this year. The project initially set out to donate a much needed projector and laptop to facilitate more interactive learning, and to relieve the issues of air quality and heat during the summer months. A site visit to the school’s library inspired an upscaling of the project, to include beautification of the space, with the creation of a prominent Cat in the Hat mural and similar other aesthetic additions. Mrs. Cyra Fletcher, the school’s librarian, described the library upgrade as “something which we urgently needed to address a dwindling interest in reading in general, and to

help make leaning more interactive”. She said the library beautification is already “paying off, as the children find the environment more visually stimulating and child-friendly”. The Adopt-A-Cause project is the bank’s community flagship programme. It is intended to serve as a mechanism through which staff interact with their host communities “not as service providers, but as neighbours and friends” explained CIBC FirstCaribbean Country Manager, Ladesa James-Williams. In that regard, Adopt-A-Cause projects are researched and selected by the employees of the bank. Over the years, the programme has become both a community “giveback exercise and a team bonding activity” which employees eagerly anticipate, Mrs. Williams added. Approximately 30 staff members from various operational units of the bank dedicated their Saturday to the project. In some instances, children accompanied their parent in the exercise which one team member described

CIBC Adopt-A-Cause team members at the Ave Maria Girls Primary School

as “teaching our children to develop community spirit and to appreciate community building as a responsibility of every citizen”. The completion of The Montessori

Centre road safety project last week, and the library upgrade at the Ave Maria Girls’ Primary School this week, have now expanded the Adopt-A-Cause footprint island-wide to eleven learning institutions.

The Saint Lucia Government Gazette Company Registration

Name: Zippy Freight Services LTD.

Name: Henri Clem. Holdings

Description: Import and freight services, online

Description: Management company

publishing services, facilitation of overseas buying

Directors: Erwin Juliana Louisy

Directors: Kayode M. Francois, Ronald Joseph,

Date Incorporated: Aug-30-18

Christopher Andreaus Pallante

Chamber: Amicus Legal, Saint Lucia

Date Incorporated: Aug-24-18 Chamber: Crowne Corporate Services Limited

Name: Talent Scoope Inc Description: Professional Employer Organisation (PEO)

Name: Feliz Tours & Consultancy Services Limited

Directors: Goretti Julia Paul

Description: Travel Consultancy

Date Incorporated: Aug-31-18

Directors: Renin John, Junior Francis George

Chamber: SEDU, Saint Lucia

Date Incorporated: Aug-28-18 Chamber: Shawn Innocent

Name: Shangri La Toc Description: Boutique Hotel,

Name: Festiva Touring Inc.

events / venue services, conferencing

Description: Touring packages, events

Directors: Anderson Albert Tarapasade

Directors: Ervin Melville

Date Incorporated: Aug-31-18

Date Incorporated: Aug-28-18

Chamber: SEDU, Saint Lucia

Chamber: SEDU, Saint Lucia Name: South East Enterprises Limited Name: Legal Care Inc.

Description: General Construction services,

Description: To provide legal services

general agricultural activities, real estate services

Directors: Sarah Flood-Beaubrun

Directors: Wayne M. Jeremie

Date Incorporated: Aug-30-18

Date Incorporated: Sep-3-18

Chamber: Amicus Legal, Saint Lucia

Chamber: Cosmos Laeuille

Money Laundering

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SEPTEMBER 22, 2018

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We cannot fight cross-border money laundering with local tools

Crooks are exploiting the lack of transnational co-operation By Tom Keatinge, Director of the Centre for Financial Crime and Security Studies at the Royal United Services Institute

oney laundering is never far from the headlines. Last week ING in the Netherlands and the Danish Group Danske Bank were the lenders who found themselves in the spotlight. The former has agreed to pay Euro 775m in fines for compliance failures that allowed the alleged laundering of hundreds of millions of euros; the latter reportedly handled US$30bn in a single year through its small branch in Estonia without raising any questions, adding to existing concerns about the anti-money laundering, or AML, controls at the bank. Revelations such as the Panama and Paradise Papers, and various scandals, have repeatedly exposed the workings of schemes designed to avoid and evade tax, to recycle and invest the proceeds of corruption and to place ill-gotten gains beyond the reach of law-enforcement agencies. What all these examples have in common is that they involve multiple countries: lawyers in Panama or the British Virgin Islands for example; bank accounts in Switzerland or Dubai; companies in the Cayman Islands or the Seychelles; and company service providers in London or Hong Kong. Money laundering is a global industry, operating seamlessly across borders. The fight against money laundering and terrorist

financing has been led by the Financial Action Task Force, the Paris-based global standard-setter, for nearly 30 years. But we appear no closer to turning the tide against illicit money flows today than when FATF was founded in 1989, triggered by the narco-dollars that were then washing through the US banking system. Why is this? One overriding issue hampers the international response to money laundering. Despite the transnational nature of most moneylaundering schemes that allow kleptocrats, tax dodgers and organised crime barons to enjoy the proceeds of their crimes with impunity, the global response remains trenchantly national, hindered by complex cross-border mutual legal assistance treaties and a lack of information-sharing. The adage “follow the money” is often impossible to implement. In recent years, a handful of countries have recognised the need for better information-sharing both among government agencies and between governments and their banking sectors. This is vital because so-called suspicious transaction reports from industry form the heart of the AML regime. Partnerships such as the UK’s Joint Money Laundering Intelligence Taskforce or Australia’s FinTel Alliance have brought together banks and watchdogs to pool data and create a more complete picture of the way criminals are exploiting the financial system. But these partnerships,

Danske Bank reportedly handled $30bn in a single year through its small branch in Estonia without raising any questions

welcome though they are, remain domestic. The investigations they undertake more often than not quickly lead across a border that hinders their work but does not slow down the criminals. Following these trails is timeconsuming, expensive and frustrating, and investigations often progress no further. Nowhere is this failure to create a crossborder response to a transnational crime more inexcusable than in the EU. The EU bureaucracy has produced a series of antimoney laundering directives to address this problem. The fifth version was introduced in 2016, adopted in April 2018 and must be implemented by the 28 member states by 2020. (The UK has confirmed it will do so, despite Brexit.) The process will take almost four years, even as criminals take advantage of new technology and evolve their tactics by the month. EU-wide rules—however tardy—are welcome, but implementation remains domestic. Each country has its financial intelligence unit, to which banks and other regulated entities must report suspicious transactions. Some countries actively resist group solutions. The EU does much better on border

controls and other kinds of crime. Blocwide systems such as the Schengen Information System and Europol— Europe’s law-enforcement agency— operate secure information-sharing platforms and provide a structured, collaborative and co-ordinated lawenforcement response. Despite nascent efforts, such a centralised and dedicated response to money laundering by the EU remains entirely lacking. The European Banking Authority reportedly commits the equivalent of only 1.8 full-time staff members to AML. Today, money moves across borders at the tap of an app or the click of a mouse on a trading floor. But the global AML regime remains rooted in an age when cheques and money transfers took five days to clear. The criminal finance industry has, like so many others, globalised, but the response has failed to adapt—something the EU is only now proposing to address. As long as we fight a cross-border challenge with a nationally-based response, the only ones benefitting are crooks, kleptocrats and criminals.

The star businessweek

SEPTEMBER 22, 2018

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How much do workforce skills matter for innovation in the Caribbean? By Jeetendra Khadan, InterAmerican Development Bank

nnovation levels in the Caribbean region are relatively low. On average, roughly 19 per cent of Caribbean firms reported having engaged in some form of innovation in the past three years. The range varies from the lowest, at 4.8 per cent of firms in Dominica, to the highest, at 53 per cent of firms in Guyana. A higher proportion of firms reported their intention to engage in innovation in the next two years: an average of 35 per cent of firms indicated their intention to undertake technological innovation in the next two years and 39 per cent expect to undertake non-technological innovation. Not surprisingly, only 10.3 per cent of firms in the Caribbean have an innovation department: the range varies from the lowest, at 1.6 per cent of firms in Dominica, to the highest, at 36.7 per cent of firms in Guyana. Innovation activities in a country or firm require human capital with the ability to generate and apply knowledge and ideas. In fact, studies have found that innovation at the firm level is positively associated with

Flow and C&W Business Solutions

encourages everyone to be on alert and ready to take the necessary steps to protect family and property during the Hurricane season. Our commitment is to keep our customers connected to family and friends especially when it matters most, during times of disaster.

Innovation levels in the Caribbean region are relatively low. On average, roughly 19 per cent of Caribbean firms reported having engaged in some form of innovation in the past three years

Is workforce education important for innovation?

workforce qualifications and expenditure on training. Highly skilled workers are thought to be more apt for generating ideas and adopting technologies to make improvements on existing products and processes. However, Caribbean firms have consistently identified an “inadequately educated workforce” as their most serious obstacle to improving performance. Thus, understanding the link between human capital constraints faced by Caribbean firms and their innovation decisions is a critical issue for policymakers and firms. In that regard, this blog presents the findings of a recent IDB paper which looked at the relationship between several dimensions of human capital constraints and past and future innovation decisions of Caribbean firms.

Challenges to obtaining the desired workforce can potentially lower the likelihood of innovation

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Four aspects of workforce constraints for Caribbean firms are examined: (i) the difficulty of a firm finding new skilled workers, (ii) educational mismatches for managerial and professional job types, (iii) difficulty finding employees with core and job-related skills, and (iv) in-firm training. The econometric analysis suggests that when firms have difficulty finding new skilled employees, they are less likely to engage in any type of innovation, and this is also true for decisions about future technological and non-technological innovations. It was also found that

educational mismatches for managerial and professional job types also lower the likelihood of innovation. Moreover, firms that face challenges in finding employees with the required core and job-related skills at the managerial and professional levels are less likely to innovate than those that don’t. In fact, future technological innovation is lowered by 18 per cent, on average, when firms are unable to find professionals with the appropriate core skills. On the other hand, while in-firm training is found to increase the probability of innovation, its magnitude is low.

Policy implications for firms and governments

Such outcomes could lower productivity growth. It is therefore important for policymakers and firms to enact policies to address the underlying causes of educational and skill mismatches in the labour force and streamline education and training programmes that are most relevant to the evolving demands of the labour market. Admittedly, the literature on the underlying factors causing human capital constraints in the Caribbean is sparse, but what exists suggests that the relatively deficient human capital stock is related to worker emigration, quality of education and training and perhaps the need for more relevant education and training programmes. The latter may reflect gaps in education policies, information asymmetries between institutions that provide education and training and private sector demand for labour, and weak monitoring and evaluation mechanisms within the region’s education system. However, further research in this area is needed along with better-quality data to make more conclusive policy statements. Additionally, given the low intensity of training reported by firms, there is significant potential to increase infirm training and/or establish networks with both local and foreign institutions to design training programmes that can enhance the quality and relevance of firms’ human capital stock within the Caribbean.

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