FSB published two reports as part of its work to assess and address the decline in correspondent banking relationships: one is a progress report on the FSB action plan to assess and address the decline in correspondent banking and the second report is a stocktake on remittance service providers’ access to banking services. These reports have been delivered to G20 Finance Ministers and Central Bank Governors. FSB also published a short cover note, highlighting key messages to the G20 leaders.
A decline in the number of correspondent banking relationships remains a source of concern for the international community. This is because, in affected jurisdictions, it may impact the ability to send and receive international payments or drive some payment flows underground, with potential adverse consequences on international trade, growth, financial inclusion, and the stability and integrity of the financial system. The following are the key highlights of the two reports:
- Progress report on FSB action plan. The progress report highlights actions taken to implement the four-point action plan on correspondent banking since the July 2017 update of FSB. The actions include strengthening tools for due diligence by correspondent banks; data collection and analysis; clarifying regulatory expectations, as a matter of priority, including guidance by the Financial Action Task Force (FATF) and BCBS; and domestic capacity building in jurisdictions that are home to the affected respondent banks. This is the fourth progress report and it follows the earlier reports that were published in August 2016, December 2016, and July 2017.
- Report on stocktake of remittance service providers’ access to banking services. The report identifies intertwined drivers for the termination of banking services to remittance service providers, including profitability, the perceived high risk of the remittance sector from an anti-money laundering/counter terrorism financing (AML/CFT) perspective, supervision of remittance service providers, and, in some jurisdictions, weak compliance with international standards, particularly those relating to AML/CFT. FSB, Financial Action Task Force, Global Partnership for Financial Inclusion, IMF, and World Bank will coordinate to monitor take-up of the recommendations of this stocktake effort and report back to the G20 in July 2019. The report makes 19 recommendations in four areas to address gaps and remaining barriers to banking services by remittance service providers. The four categories of recommendations are:
- Promoting dialog and communication between the banking and remittance sectors
- Improving implementation of international standards and oversight of the remittance sector
- Use of innovation in the remittance sector and its possible role in enabling remittance service providers’ greater access to banking services
- Technical assistance related to remittances
Keywords: International, Banking, Correspondent Banking, Progress Report, Recommendations on Remittances, AML/CFT, FSB
Previous ArticleEBA Opinion on Measures to Address Macro-Prudential Risk in Belgium
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.
FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).
EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.