On October 6, 2015, the Committee on Payments and Market Infrastructures published a consultative report on correspondent banking which recommends technical measures to address the risk of fragmentation of cross-border payment networks. The CPMI was tasked with producing a report on the current trends and technical measures which raise concerns and costs issues for banks involved in correspondent banking. Some banks providing correspondent banking services have been reducing the number of relationships they maintain and establishing few new ones. Increasing costs and uncertainty about customer due diligence requirements for anti-money laundering purposes are among the key reasons. The CPMI makes recommendations to address those issues, including: (i) using KYC utilities such as Genpact and Bankers Almanac; (ii) using legal entity identifiers; (iii) that the Financial Action Task Force and other authorities with AML responsibilities provide clarity on the extent that banks need to know their customers’ customers, on data privacy concerns and the type of information that information sharing mechanisms could store and distribute; and (iv) that stakeholders consider determining whether the current payment message is efficient and effective. The CPMI recommendations are open for comment until December 7, 2015.

The consultation paper is available at: http://www.bis.org/cpmi/publ/d136.pdf.