FSB action plan to assess and address the decline in correspondent banking: Progress report
The decline in the number of correspondent banking relationships remains a source of concern for the international community, as the number of active correspondent banks declined by 3.4% in 2018, although this represents a slight slowing of the rate of decline compared to 2017. This decline affected the vast majority of jurisdictions and all three major currencies in 2018, although it was more pronounced for USD (-5.9%) compared to EUR (-4.6%) and GBP (-3%). Concentration increased, as fewer banks are handling more payments. A comprehensive data set was published by the Committee on Markets and Payment Infrastructures (CPMI) on 27 May, based on SWIFT data.
With the international components of the FSB coordinated action plan largely in place, attention has turned to monitoring of implementation:
There is growing evidence of the concrete implementation of regulatory clarifications by national authorities, following the guidance provided by the Financial Action Task Force and the Basel Committee on Banking Supervision.
To support domestic capacity building in jurisdictions that are home to affected respondent banks, official sector technical assistance still requires ongoing coordination. Industry initiatives are gaining traction in that field, especially the additional guidance developed by the Wolfsberg Group to implement their Correspondent Banking Due Diligence Questionnaire.
The technical measures recommended by CPMI to improve the efficiency of due diligence procedures and reduce compliance costs are now generally available for use, but their concrete implementation still requires continued focus by industry and the official sector, such as the use of the Legal Entity Identifier in payment messages and practical steps to support effective information sharing.
The FSB also published a monitoring report which assesses implementation of its March 2018 recommendations to address problems with remittance services providers’ access to banking services.