This reminded us of the tension between wanting to reduce the risk that financial system is used to facilitate crime and terrorism but also wanting to ensure that we do not increase financial exclusion. The sharp decline in global correspondent banking has left some developing countries without access to the international financial community. Mark Carney has warned that this could lead to financial abandonment for certain countries . We have already seen that in Belize the decline in correspondence banking has meant that funds have had to be cleared through the central bank. This requires the public central bank to take over the monitoring of customers and financial transactions. Economist have warned that most central banks in developing nations are not equipped to conduct the same standards of customer due diligence as the large international banks. Moreover several central banks would struggle to process the same volume of transactions as the commercial banks. Moving compliance and oversight of financial transactions in developing countries to the central banks would reduce the quality of AML/CTF controls and increase the risk of the financial systems being misused. It also would require a significant investment from the central banks to upgrade their current facilities to meet international standards. Arguably the cost of monitoring transactions for suspicious activity would then fall back to public administration. However the ability of central banks to undertake detailed customer due diligence would be extremely expensive. In developing nations this public money arguably could be better spent on other initiatives. Moreover the G20 have significant concerns about the impact of de-risking on MSBs and the unintended consequences for remittances to developing nations. As MSB
This reminded us of the tension between wanting to reduce the risk that financial system is used to facilitate crime and terrorism but also wanting to ensure that we do not increase financial exclusion. The sharp decline in global correspondent banking has left some developing countries without access to the international financial community. Mark Carney has warned that this could lead to financial abandonment for certain countries . We have already seen that in Belize the decline in correspondence banking has meant that funds have had to be cleared through the central bank. This requires the public central bank to take over the monitoring of customers and financial transactions. Economist have warned that most central banks in developing nations are not equipped to conduct the same standards of customer due diligence as the large international banks. Moreover several central banks would struggle to process the same volume of transactions as the commercial banks. Moving compliance and oversight of financial transactions in developing countries to the central banks would reduce the quality of AML/CTF controls and increase the risk of the financial systems being misused. It also would require a significant investment from the central banks to upgrade their current facilities to meet international standards. Arguably the cost of monitoring transactions for suspicious activity would then fall back to public administration. However the ability of central banks to undertake detailed customer due diligence would be extremely expensive. In developing nations this public money arguably could be better spent on other initiatives. Moreover the G20 have significant concerns about the impact of de-risking on MSBs and the unintended consequences for remittances to developing nations. As MSB
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