The Financial Stability Board (FSB) has published a progress report concerning its action plan to assess and address the decline in correspondent banking.
The report notes that implementation of the action plan is making good progress. Notably, the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision (BCBS) have issued guidance to further clarify regulatory expectations, a growing number of technical assistance providers are participating in the FSB coordination framework, and work on technical measures recommended by the Committee on Payments and Market Infrastructures to reduce due diligence costs has progressed.
In terms of clarifying regulatory expectations, action undertaken since December 2016 includes:
- the BCBS publishing in June 2017 the final version of its revised guidance on correspondent banking;
- the FATF deciding in June 2017 that there will be no further work on the definition of correspondent banking given the lack of consensus by industry and the authorities about the change of definition. However, FATF will specifically consider in the future what further action might be needed in this area;
- the Wolfsberg Group is finalising a revised and expanded ‘Anti-Money Laundering Questionnaire’ to outline a reasonable set of questions which a correspondent bank asks of its respondents and which could serve as a basis for the standardisation of the content held in know-your-customer utilities; and
- the Wolfsberg Group is also planning certain outreach activities to encourage the use of its questionnaire, once it has been published.
The FSB also notes that the new FATF and BCBS guidance should be followed up by statements at the national level by national regulators to clarify expectations at the national level, so that they are appropriately reflected in supervisory practices and banks’ risk management practices. In addition, FATF will finalise its work on information sharing, including a guidance paper on Private sector information sharing, expected to be finalised by the end of 2017.