IMF Working Papers

Challenges in Correspondent Banking in the Small States of the Pacific

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

April 7, 2017

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Jihad Alwazir, Fazurin Jamaludin, Dongyeol Lee, Niamh Sheridan, and Patrizia Tumbarello. Challenges in Correspondent Banking in the Small States of the Pacific, (USA: International Monetary Fund, 2017) accessed September 19, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Anti-money laundering and combating the financing of terrorism (AML/CFT), Balance of payments, Banking, Correspondent banking, Crime, Financial services, Fiscal accounting and reporting, Money laundering, Public financial management (PFM), Remittances

Keywords: AML/CFT, Anti-money laundering and combating the financing of terrorism (AML/CFT), Asia and Pacific, Australia and New Zealand, Average cost, Bank Pacific, Bank South Pacific, Central bank, Correspondent banking, Digital economy, Due diligence, Fiscal accounting and reporting, Global, KYC remittance recipient, Marshall Island bank, Money laundering, Money transfer operators, MTO bank accounts, Pacific islands, Remittance sector, Remittances, Respondent bank, Small states, Small states of the Pacific, WP

Publication Details

  • Pages:

    29

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2017/090

  • Stock No:

    WPIEA2017090

  • ISBN:

    9781475593471

  • ISSN:

    1018-5941