MONEYVAL Roundtable on “Re-connecting the de-risked”

Strasbourg 17/10/2017
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Moneyval Roundtable Meeting - 12 October 2017, The World Bank, Washington D.C.

Moneyval Roundtable Meeting - 12 October 2017, The World Bank, Washington D.C.

On 11 and 12 October 2017, MONEYVAL organised two roundtables in New York City and Washington D.C. on correspondent banking (“Re-connecting the de-risked”).

Each roundtable brought together around 40-50 participants from global financial institutions, respondent banks from several MONEYVAL jurisdictions and relevant international organisations (e.g. the UN Counter-Terrorism Committee; the World Bank; the Financial Stability Board; the International Monetary Fund; and the Financial Action Task Force, FATF). Representatives from the US Treasury, the Federal Reserve and the State Department also attended. Amongst the numerous speakers was the Vice-President of the FATF, Ms Jennifer Fowler, the FATF Executive Secretary, Mr David Lewis, and MONEYVAL’s President, Mr Daniel Thelesklaf.

Correspondent banking is essential for customer payments, especially across borders, and for the access of banks themselves to foreign financial systems. The FATF states that “financial institutions have increasingly decided to avoid, rather than to manage, possible money laundering or terrorist financing risks, by terminating business relationships with entire regions or classes of customers. De-risking is not in line with the FATF Recommendations, and is a serious concern to the international community” (Source: FATF Guidance on Correspondent Banking Services, October 2016).

According to data by the Financial Stability Board of July 2017, the number of correspondent relationships by global banks with eastern European banks has decreased between 2011-2016 by 20% (almost twice as much as in other regions of the world, such as the Caribbean or Africa). In many MONEYVAL jurisdictions, de-risking has occurred and, as a consequence, the money laundering and terrorist financing risks have increased.

The roundtables aimed at informing about the work of MONEYVAL, in particular about the mutual evaluation process and how MONEYVAL reports can be used by global financial institutions. It also sought to clarify the regulatory expectations and explain the relevant global standard set by the FATF for the provision of correspondent banking. Participants discussed what correspondent banks can expect from respondent banks, and what respondent banks can do to contribute to manage related money laundering and terrorist financing risks.

MONEYVAL would like to warmly thank Citibank for hosting the event in New York City, and the World Bank for hosting the event in Washington, D.C.