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Correspondent banking fades; de-risking gets the blame

Joe Mont | July 11, 2017

Further action is needed to address the global decline in correspondent banking relationships, warns the Financial Stability Board in a July 4 report to G20 leaders. Targeted geographic regions are being “de-risked,” leaving local businesses without access to the international financial community.

Correspondent banking relationships are those where one financial institution provides services on behalf of another in a different location to facilitate cross-border payments.  In recent years, these financial relationships have declined most significantly in Eastern Europe, Africa, the Caribbean, Latin America, and the Pacific locales of Melanesia, Micronesia, and Polynesia.

The decline, the FSB says, is a concern because it may affect the ability to send and receive international payments or drive payments underground in certain jurisdictions. This could negatively affect trade, financial stability, and the integrity of the financial system.

The FSB—currently... To get the full story, subscribe now.