On August 25, 2016, the FSB published a progress report for the G20 on its action plan to assess and address the decline in correspondent banking. Correspondent banking relationships enable banks to access financial services in different jurisdictions and provide cross-border payment services to their customers. The FSB comments that the international community are concerned by the decline in the number of correspondent banking relationships because the ability to send and receive international payments could be impacted and have repercussions on the growth, financial inclusivity, stability and integrity of the financial system. The report notes the progress made on the FSB’s four point action plan that was established in November 2015. The first element of this is further examination of the dimensions and implications of the decline in correspondent banking. Second is clarifying regulatory expectations, including more guidance by the Financial Action Task Force. Third is domestic capacity-building in jurisdictions that are home to affected respondent banks. Fourth is the strengthening of tools for due diligence by correspondent banks. In the report, the FSB highlights several steps that have been taken by various bodies (including the CPMI, IMF and FATF) to implement the action plan. The FSB aims to publish a more comprehensive report by year end 2016.
The progress report is available at: http://www.fsb.org/wp-content/uploads/Correspondent-Banking-progress-report.pdf.