The decline has raised concerns that some payments will pass through unregulated cash couriers.
The decline has raised concerns that some payments will pass through unregulated cash couriers.

FSB Urges Action to Stem Decline in Correspondent Banking

FSB Urges Action to Stem Decline in Correspondent Banking

The decline in correspondent banking, a crucial channel for moving cash from one country to another, shows no sign of slowing despite measures agreed in 2015 to stem the slide, global regulators said on Tuesday.
Banks have been pulling out of business for a variety of reasons from not making enough money to industry consolidation to the fear of falling foul of tougher new rules designed to prevent money laundering and terrorist financing, Reuters reported.
The Financial Stability Board, which coordinates financial regulations for the Group of 20 countries, said the places most affected tended to be small economies or those finding it difficult to apply the new rules.
The decline has raised concerns that some payments will pass through unregulated cash couriers instead, harming international trade and driving some people out of the world’s financial system, the FSB said in a report.
The FSB unveiled a four-point action plan in November 2015 to curb the decline and has since made clear that correspondent banks do not have to know their local customer’s customer but the fall has shown no signs of abating. “The decline in the number of correspondent banking relationships is continuing,” the FSB report said.
It said all regions had been hit to a varying degree, with the Caribbean and small states in the Pacific suffering the worst and Eastern Europe hit hard as well. The FSB said transactions in US dollars and euros were the most affected.
In correspondent banking, a global bank typically channels payments in a country to a local bank with no international network in another country.
The FSB said its latest update for G-20 leaders meeting this week in Hamburg, Germany, draws on better data after sampling 300 banks in 50 countries, and payment messages from SWIFT, a global network that links lenders.
“It is too early to tell what the effects of measures taken so far will be, and to what extent they will stem the decline,” the FSB said.
The volume of payments remains roughly unchanged, but the involvement of fewer banks means longer payment chains and countries relying on fewer international lenders, the FSB said.
The FSB will convene a meeting of private and public sector bodies on the sidelines of the International Monetary Fund-World Bank annual meetings in October to discuss its findings so.
The watchdog will also obtain deeper and more frequent data on the sector from SWIFT over the coming year to monitor progress, while the World Bank is studying the impact of the decline in remittances to see if costs are being driven up.

Short URL : https://goo.gl/aAMxv7
  1. https://goo.gl/ZbsAbp
  • https://goo.gl/WSioj2
  • https://goo.gl/5ZNpkB
  • https://goo.gl/5jqaCS
  • https://goo.gl/NdJ7dM

You can also read ...

The 2017 “WannaCry” cyber attack demanded affected users wire ransom money via Bitcoin.
You don’t have to be a digital whizz kid to know that the wars...
South Africa Wants to Increase VAT Rates
With an economic downgrade to junk status, a slowly growing...
A woman protests a planned coal-fired plant  in southern Thailand.
Southeast Asian governments are finding themselves caught...
Singapore to Hike GST for First  Time in Decade
Singapore is expected to raise goods and services tax for the...
Malaysia has shown willingness to move towards  a market-oriented mechanism.
Forty-three World Trade Organization members who participated...
62% of Japan Loan Rate  Below 1%
After two years of the Bank of Japan guiding key interest...
China’s Commerce Ministry says the proposed US measures are groundless.
China said proposed US tariffs on imported steel and aluminum...
Fitch Upgrades Greece
Fitch Ratings raised Greece’s sovereign credit rating by one...

Add new comment

Read our comment policy before posting your viewpoints