FSB publishes progress report on measures to address the decline in correspondent banking and updated data

16 November 2018

The FSB published updated data on trends in correspondent banking relationships using data provided by SWIFT as of end-2017 and a progress report on the FSB’s four-point action plan to assess and address the decline in correspondent banking that will be delivered to the G20 Summit.

FSB Correspondent banking data report – Update

The FSB correspondent banking data report shows that the decline in the number of active correspondents, as measured by the flow of SWIFT payment messages, continued in 2017, with a year-on-year reduction of 4.1%. All continents or sub-continents saw a decline in the number of active correspondents in 2017, with the rate of decline ranging between 5.2% and 6.7%, except in Northern America where it was 2.9%. From January 2011 to end-2017, the number of active correspondents declined globally by 15.5%.

The number of active corridors (defined as country pairs that processed at least one transaction) also declined in 2017, by 2.4%, and from January 2011 the data shows a decline of 7.3%.

Small economies with a Gross Domestic Product (GDP) of less than USD 10 billion have seen a stronger decline in the number of foreign counterparties per local banks (-23.4%), compared with economies with a GDP of between USD 10 billion and 1 trillion (approximately -18%) and economies with a GDP of above USD 1 trillion (-8.4%). The decline in small economies has not affected, on average, the total volume and value of payment messages they received; these have increased more for small economies compared to the larger economies.

Progress report

The progress report highlights the further actions taken to implement the FSB’s four-point action plan on correspondent banking since the FSB’s March 2018 update. These include:

• Strengthening tools for due diligence by correspondent banks – The report notes the commitment of large banks to implement the Wolfsberg Group Correspondent Banking Due Diligence Questionnaire by end-2019. The FSB continues to encourage the industry to use the questionnaire to achieve greater efficiencies and improved standardisation in Know Your Customer utilities.
• Clarifying regulatory expectations – The Financial Action Task Force (FATF) and Basel Committee on Banking Supervision (BCBS) have conducted surveys of their memberships to assess the transmission and traction of their guidance on correspondent banking. While there generally has been a high level of dissemination of the guidance, some national authorities may need to do more.
• Domestic capacity building – The FSB recently held a workshop, involving both public and private sector participants, on the coordination and prioritisation of capacity development, including to strengthen domestic compliance with Anti-Money Laundering and Countering the Finance of Terrorism Public standards. The FSB is also exploring with the World Trade Organization, International Finance Corporation and multilateral development banks how solutions developed to address the reduction in correspondent banking relationships might also be used in the context of trade finance.

Press release

Progress report

Correspondent banking data report

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