The issue of loss of correspondent banking relationships due to de-risking, a phenomenon where larger international banks curtail relationships with local banks in vulnerable economies, has been categorized as a potentially huge crisis for Belize and other smaller countries in the region.
The commonwealth has announced that this week on August 10th will be convening a meeting with banks and financial gurus and global regulators to explore its report on solutions to a problem that is threatening development in vulnerable economies.
Joining the commonwealth in the meeting on Wednesday at the Commonwealth headquarters in London will be the Executive Secretary of the Financial Action Task Force (FATF) - the international anti-money laundering and counter financing terrorism standard setter, the British Bankers’ Association, HSBC Holdings, Santander and the Wolfsberg Group who will all discuss and examine proposed solutions for the problem.
Proposed solutions that will be discussed at the meeting will include measures such as best practice standards for money service businesses to boost their legitimacy and reputation, and improving guidance and risk-tolerance standards for banks, balancing the need to prevent illegal activity with ensuring smaller institutions in developing countries are not excluded from the global financial system.
The paper also proposes building capacity for financial regulators in developing countries and ensuring they are part of global conversations on the setting of these standards and policies.
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