Challenges in Correspondent Banking in the Small States of the Pacific

Jihad Alwazir, Fazurin Jamaludin, Dongyeol Lee, Niamh Sheridan and Patrizia Tumbarello

No 2017/090, IMF Working Papers from International Monetary Fund

Abstract: Access to financial services in the small states of the Pacific is being eroded. Weaknesses in Anti-Money Laundering and Combating the Financing of Terrorism compliance in the context of high levels of remittances are contributing to banks’ decisions to withdraw corresponding banking relationships and close bank accounts of money transfer operators. In this paper, we gather evidence on these developments in the small states of the Pacific, discuss the main drivers, and the potentially negative impact on the financial sector and macroeconomy. We then identify the collective efforts needed to address the consequences of withdrawal of corresponding banking relationships and outline policy measures to help the affected countries mitigate the impact.

Keywords: WP; remittance sector; respondent bank; average cost; bank Pacific; central bank; Pacific islands; small states; correspondent banking; remittances; AML/CFT; digital economy; bank South Pacific; Marshall Island bank; small states of the Pacific; due diligence; money transfer operators; MTO bank accounts; KYC remittance recipient; Anti-money laundering and combating the financing of terrorism (AML/CFT); Fiscal accounting and reporting; Money laundering; Global; Australia and New Zealand; Asia and Pacific (search for similar items in EconPapers)
Pages: 29
Date: 2017-04-07
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Citations: View citations in EconPapers (3)

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