FSB action plan to assess and address the decline in correspondent banking: Progress report to G20 Finance Ministers and Central Bank Governors meeting of March 2018
This report provides a progress report on the FSB’s action plan on correspondent banking which was delivered to G20 Finance Ministers and Central Bank Governor in March 2018.
A decline in the number of correspondent banking relationships remains a source of concern for the international community 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, as well as the stability and integrity of the financial system.
The progress report highlights actions to implement the FSB’s four-point action plan on correspondent banking taken since the FSB’s last update. These include:
- Strengthening tools for due diligence by correspondent banks – The Wolfsberg Group (members include 13 major correspondent banks) published in February 2018 a Correspondent Banking Due Diligence Questionnaire, which will support a more standardised collection of information on respondent banks. The Basel Committee on Banking Supervision (BCBS), Committee on Payments and Market Infrastructures (CPMI), Financial Action Task Force (FATF) and FSB made a joint statement on 6 March welcoming the questionnaire as one of the industry initiatives that will help to address the decline in the number of correspondent banking relationships.
In addition, work needs to continue to implement industry initiatives that follow up on CPMI recommendations, such as Know-Your-Customer utilities, the recently published option to include the Legal Entity Identifier in payment messages and the industry standards on the use of these messages.
Data collection and analysis – The FSB published on 6 March a Correspondent Banking Data Update, using data provided by SWIFT on the number of correspondent banking relationships, The World Bank and International Monetary Fund (IMF) are also monitoring developments and analysing the impact of the decline in the number of relationships and monitor developments.
Clarifying regulatory expectations – The FATF and (BCBS) are conducting surveys of their membership to assess the transmission and traction of their guidance on correspondent banking.
Domestic capacity building – Public sector technical assistance providers are promoting coordination of their capacity-building activities to improve and build trust in the supervisory and compliance frameworks of affected jurisdictions.
Together with the progress report the FSB also published a Stocktake on remittance service providers’ access to banking services.