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Report Highlights Bank De-Risking Challenges For Caribbean

by Mike Godfrey, Lowtax.net, Washington
11 August, 2016

The Commonwealth Secretariat has published a report on the results of a survey of its 53 member states on the challenges posed by the loss of correspondent banking relationships, as a result of "bank de-risking."

According to the report, the principal concern among Commonwealth Caribbean and Pacific nations is the loss of correspondent banking relationships, while African and South Asian members expressed concern about rising remittance costs.

The concerns of Caribbean nations reflect the fact that correspondent banking relationship restrictions and closures have been greatest in the Caribbean. Almost all Commonwealth Caribbean countries reported correspondent banking relationship losses since 2012, and the majority reporting multiple closures.

To address the wider issues of de-risking, the report presents a number of potential solutions including the creation of a global forum for regulators to ensure the incorporation of developing country perspectives in the development of international standards and regulation, the development of better guidance and risk tolerance standards for banks, and the creation of best practice standards for money service businesses.

The report also recommends the enhancement of capacity building to assist regulators and financial institutions in the implementation of anti-money laundering and combatting the financing of terrorism regulations.

The report published by the Commonwealth Secretariat seeks to complement and enhance previous research undertaken by international organizations, such as the Financial Stability Board, the Financial Action Task Force, and the World Bank, and by research institutes, such as the Center for Global Development.

The Secretariat is hosting a dialogue on the report in London chaired by Reginald Darius, Commonwealth Secretariat Economic Policy Director. A panel of experts will discuss the findings and recommendations in the report.

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