The Basel, Switzerland-based Financial Stability Board today published a progress report on steps taken in response to a decline in the number of worldwide correspondent banking relationships. The report noted that correspondent relationships have continued to decline since the FSB launched an effort to address the problem in 2015; the number of active correspondent banks fell by 3.4% in 2018, though the report noted that the decline was slower relative to previous years.
The decline in correspondent banking is largely attributed to “derisking” as banks respond to stepped-up regulatory focus on anti-money laundering compliance. FSB acknowledged the ongoing efforts to clarify such regulatory expectations, and highlighted actions taken by organizations to help provide resources to banks around the globe. FSB specifically referenced a report by BAFT—an ABA subsidiary–published earlier this year.
With respect to remittance service providers accessing banking services, the FSB noted that while positive steps have been taken, “further work by national authorities, international organizations, remittance firms and banks, is needed to fully implement the FSB’s recommendations to address remittance firms’ access to banking services.”
