Global financial institutions, regulatory agencies and industry groups should develop and adopt standardized know-your-customer requirements to reduce due diligence costs tied to correspondent transactions, central bankers said Wednesday. In a 62-page report, the Bank for International Settlements (BIS), a Basel-based forum representing over 60 central banks, warned that the exodus of commercial banks from high-risk correspondent services in an attempt to avoid regulatory and legal penalties is threatening cross-border payments and possibly fueling the use of unregulated "shadow banking" alternatives. Financial institutions cited increased costs and uncertainty over the extent to which they must identify their correspondent customers' customers for...
The primary supervisor of U.S. national banks will soon publish guidance "reiterating" how financial institutions can manage compliance risks posed by their foreign correspondent clients, the agency's chief said Wednesday.
Governments have yet to collect sufficient data to fully understand the reasons for and impact of a reported decline in correspondent banking services throughout the globe, a Basel-based organization said Friday.
The International Monetary Fund called on watchdog groups and governments to clarify their compliance expectations and improve cross-border data-sharing in an effort to reverse a global decline in correspondent banking relationships.
A number of large U.S. and international banks are dropping customer accounts and services tied to high-risk geographical regions and lines of business in response to regulatory pressure, including enforcement actions.