CARICOM’s Banking Crisis: How the John Doe Summons Could Spark a Regional Financial Apocalypse

One morning soon, a bank card issued by a Caribbean lender may simply stop working in New York. A remittance wire from a son in Florida to his mother in Grenada may vanish into the ether. Tourists landing in Antigua could find their cards being declined at the hotel check-in desk. These will not be tech glitches. They will be the tremors of a financial earthquake triggered not by a credit crisis, but by an insidious legal instrument wielded not with SWAT teams but by court orders.

The Caribbean’s banking infrastructure stands on the edge—one summons away from isolation.

The U.S. Internal Revenue Service (IRS) aided and abetted by the US Department of Justice (DoJ) has unleashed its most existential weapon yet on the offshore finance world. It is known as the John Doe summons. And for the fragile financial ecosystem of CARICOM, the Caribbean Community of 15 states and territories it is no longer a question of managing damage. It’s a question of the last person out turning off the lights. Perhaps, the final nail in the coffin and the end of what can only be described as an inglorious era. The John Doe Summons CARICOM situation has now evolved into a full-scale compliance crisis, with implications reaching far beyond the region.

A Weaponized Summons with Global Reach

The John Doe summons is the IRS’s scalpel for slicing through secrecy. It's used when U.S. authorities suspect wrongdoing by a group of unnamed individuals and want third parties such as banks, service providers, trust companies, and lawyers, who for years have quietly toiled away earning their income by assisting individuals and perhaps turning a blind eye to the realities to their questions and instructions. Easy money earned by them may now be the very invoices that lends them jail time. Similarly, the summons covers couriers, and even clearinghouses and obligates them to hand over the documents that will help identify the tax cheats. In short none is exempt. On December 23, 2024, a federal court in Manhattan authorised the latest salvo: sweeping John Doe summonses targeting Trident Trust Group, a major offshore services provider operating in over 30 countries, including several in the Caribbean.

The Trident investigation is wide-reaching. It seeks records on US clients dating back to 2014, and includes enquiries made of major U.S. banks like Wells Fargo, Citibank, Bank of America. Even well-established delivery services such as FedEx and DHL fall under its ambit. Trident has been named repeatedly in major investigative exposés, including the Pandora Papers. And while the IRS stops short of accusing the firm itself of wrongdoing, its business model, a latticework of nominee directors, shell companies, and offshore trusts has long been a red flag to the raging bull of U.S. regulators.

Here’s where it hits CARICOM like a sledgehammer: many of Trident's corporate structures pass through the ‘sleepy’ Caribbean’s financial system. And the IRS isn’t targeting banks in the Caribbean directly. It’s hitting them where it hurts in their U.S. correspondent accounts.

John Doe Summons CARICOM: How U.S. Enforcement is Reshaping Caribbean Banking

The John Doe summons is designed to be all intrusive. Even clients who are not U.S. citizens could conceivably fall into its net simply by using a U.S. mailing address, holding a U.S. mobile phone number, or naming a U.S. citizen as a trust beneficiary. For small Caribbean jurisdictions that rely on trust services business, tourism, and diaspora remittances, this is a financial neutron bomb.

For Banks in the Bahamas, Barbados, and the numerous service providers in Nevis that once quietly and perhaps unwittingly facilitated wealth structuring, the writing is on the wall. They now face reputational ruin and maybe years of litigation. If what happened to Swiss banks is anything to go by, it may probably trickle down to their staff. Once labelled “high-risk,” a bank becomes radioactive to global partners. The consequence is de-risking, a terrifyingly antiseptic term that in practice means major U.S. and European banks cut ties with their Caribbean counterparts to avoid compliance burdens and liability.

It’s happening already. The Caribbean Association of Banks reports that virtually every local bank has lost at least one correspondent relationship. For small economies with thin capital markets, this is not just inconvenient it’s potentially fatal. Tourism suffers. Importers can’t pay for goods. Families can’t send money home. The unbanked swell, and so too do the ranks of the disenfranchised.

A System That Punishes the Small for the Sins of the Powerful

CARICOM’s predicament is deeply ironic. The U.S. and Europe have allowed Delaware and London to flourish as secrecy jurisdictions, but it is Bridgetown, Santo Domingo, Castries, St George’s, Saint Johns and Charlestown that will bear the brunt of enforcement crackdowns. The IRS and DOJ make no allegations of wrongdoing against Caribbean banks in the Trident case. But that hardly matters. In today’s compliance climate, guilt by proximity is contagion enough. The threat to CARICOM’s financial industry cannot be overstated.

Plausible deniability and oblivion are no longer sufficient defence. The rules have shifted. It’s no longer about ticking the boxes. Compliance now means interpreting the “spirit of the law,” acting like a regulator even when you’re not one. Consider the portent for disaster If a bank doesn't proactively report or shut down a suspect client, it risks losing access to the U.S. financial system altogether. Loss of the Corresponding Banking relationship means it may as well just close shop. That’s tantamount to a death sentence in a world predicated on US dollars. Now consider the effect on the industry as banks are mandated to enforce compliance.

The tragedy is that many in CARICOM saw this coming or ought to have seen it coming. But they either lacked the political or financial capital to pre-empt it. Their glib acquiesce or failure to recognise a paradigm shift in the offshore zeitgeist is a damning indictment on their policy decision making. The choice now is stark: overhaul or obsolescence. The time for surface-level reforms is over.

Banks must go beyond perfunctory KYC checks. They need forensic compliance programs capable of rooting out beneficial ownership, mapping fund flows, and detecting red flags in real-time. This means capital outlays, hiring compliance specialists, and retraining staff. These are all expensive but crucial propositions in economies still recovering from the pandemic and tourism shocks.

Some regional voices are calling for a unified response, perhaps even a pan-CARICOM compliance backbone or a shared correspondent banking hub. Others pin hopes on central bank digital currencies to create parallel rails for financial transactions. But these are long shots. Time is short. The good news however is that there are a select few financial institutions that had the foresight to anticipate the demise of these trust service arrangements and proactively sought to strengthen compliance in an attempt to ensure the fidelity of their relationships with global banking. This will afford them the opportunity to benefit from nascent U.S banking regulations such as the Genius Act which is set to exercise a profound effect on the U.S. dollar ecosystem.

The Real Risk: A Parallel System Emerges

If CARICOM is shut out of the formal banking system, what fills the vacuum? Informal finance, unregulated crypto channels, and hawala-style networks are all lurking at the fringes. These systems lack oversight and accountability. Ironically, the enforcement crusade meant to curb financial opacity could catalyse a much darker ecosystem of underground banking.

This is the nightmare scenario for global regulators, a return to the shadows, but this time without the paper trail. If that happens, the entire premise of the John Doe summons as a compliance tool backfires. Tax evasion won’t end. It will just move deeper underground. But this cannot be a winning strategy for CARICOM’s banking industry.

A Moment of Reckoning for the Region and for the World

The John Doe summons against Trident Trust is more than a legal manoeuvre. It is a geopolitical shockwave. It reveals how U.S. enforcement policies however justified can and will reshape entire regions. It exposes the asymmetry in global finance, where a summons from Washington can rewire the banking map of the entire Caribbean without a single vote cast or consultation held.

For CARICOM banks, the message is blunt: adapt now, or risk being ghosted by the global economy. For Washington, the question must be asked: is financial access a privilege for the powerful or a necessity for the vulnerable? Either way, time is running out. The Caribbean is being unplugged. Who, if anyone, will plug it back in?