FSB Correspondent Banking Data Report
This report provides analysis on the decline in correspondent banking. The data was gathered as part of the FSB’s action plan to address the decline in correspondent banking relationships and was published together with the FSB progress report to G20 Leaders on the work being taken to address the issue.
The data report contains evidence from an FSB survey of over 300 banks in nearly 50 jurisdictions plus data from the global payment messaging system SWIFT. The data shows that the decline in the number of correspondent banking relationships is continuing across all regions but to a varying degree and more pronounced for US dollar and euro transactions. According to data from SWIFT the number of active correspondent banking relationships declined by 6% across all currencies between 2011-16 with Eastern Europe (-16%), Europe (ex Eastern Europe) (-15%), Oceania (-12%) and the Americas (ex North America) (-8%) the most affected. However, while the reduction of CBRs in Europe reflects for a large part the use of European-wide payment systems and banking consolidation, in 2016, the Caribbean and several regions within Oceania had high and generally increasing rates of decline, close or above 10%.
The decline in relationships appears to lead to a greater concentration, where countries and banks rely on fewer correspondent banks, and longer payment chains, which means that an increasing number of intermediaries are involved in processing the same payment. Relationship are most affected in smaller countries and jurisdictions for which the compliance with standards for anti-money laundering and combating the financing of terrorism (AML/CFT) is insufficient or unknown.
A range of reasons account for the reduction including industry consolidation, reduced profitability from these activities, risk appetites of correspondent banks and various reasons related to AML/CFT requirements.