The Financial Stability Board (FSB) today published a report to G20 Leaders on progress under its action plan to assess and address the decline in correspondent banking. In addition, the FSB released a data report which provides new data on the trends, drivers, and effects of the decline in the number of correspondent banking relationships.
A decline in the number of correspondent banking relationships is a concern because in impacted jurisdictions it may affect the ability to send and receive international payments or drive payments underground with potential adverse impacts for trade, growth, financial inclusion, financial stability and the integrity of the financial system.
The report highlights further actions taken since the previous progress report at end-2016, across the different elements of the action plan being coordinated by the FSB’s Correspondent Banking Coordination Group (CBCG). These include:
- enhanced analysis on the decline of correspondent banking relationships;
- issuance by the Basel Committee on Banking Supervision (BCBS) of revised guidelines on sound management of risks related to anti-money laundering and combating the financing of terrorism (AML/CFT), following up on the guidance on correspondent banking published last year by the Financial Action Task Force (FATF);
- further coordination of official-sector support for capacity-building in jurisdictions that are home to affected respondent banks’ activities; and
- work by the Committee on Payments and Market Infrastructures (CPMI) to strengthen tools that may contribute to reducing due diligence costs for correspondent banking relationships.