Global Regulatory Coordinators Continue Moves to Stem ‘Derisking’

The Basel, Switzerland-based Financial Stability Board published a report recently outlining steps taken in response to a decline in the number of worldwide correspondent banking relationships — a sign of “derisking” as banks respond to stepped-up regulatory focus on anti-money laundering compliance.

To address these concerns, the Financial Action Task Force is working with the Basel Committee on Banking Supervision to clarify regulatory expectations and is expected to finalize guidance on correspondent banking by October. Meanwhile, the FSB is focusing on strengthening AML frameworks in countries that large correspondent banks have exited due to compliance risk concerns.

Global regulators are also acting on recommendations to strengthen tools that correspondent banks can use for due diligence, such as standardizing tools and information for “know your customer” compliance, promoting the use of legal entity identifiers, exploring ways to improve AML information sharing and improving the quality of information in payment messages, the FSB said. For more information, contact ABA’s Rob Rowe.