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Challenges in Correspondent Banking in the Small States of the Pacific

Author

Listed:
  • Jihad Alwazir
  • Mr. Fazurin Jamaludin
  • Dongyeol Lee
  • Niamh Sheridan
  • Ms. Patrizia Tumbarello

Abstract

Access to financial services in the small states of the Pacific is being eroded. Weaknesses in Anti-Money Laundering and Combating the Financing of Terrorism compliance in the context of high levels of remittances are contributing to banks’ decisions to withdraw corresponding banking relationships and close bank accounts of money transfer operators. In this paper, we gather evidence on these developments in the small states of the Pacific, discuss the main drivers, and the potentially negative impact on the financial sector and macroeconomy. We then identify the collective efforts needed to address the consequences of withdrawal of corresponding banking relationships and outline policy measures to help the affected countries mitigate the impact.

Suggested Citation

  • Jihad Alwazir & Mr. Fazurin Jamaludin & Dongyeol Lee & Niamh Sheridan & Ms. Patrizia Tumbarello, 2017. "Challenges in Correspondent Banking in the Small States of the Pacific," IMF Working Papers 2017/090, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2017/090
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    Citations

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    Cited by:

    1. Hongjoo Hahm & Tientip Subhanij & Rui Almeida, 2021. "Finteching remittances in paradise: A path to sustainable development," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 8(3), pages 435-453, September.
    2. Mrs. Sarwat Jahan & Jayendu De & Mr. Fazurin Jamaludin & Piyaporn Sodsriwiboon & Cormac Sullivan, 2019. "The Financial Inclusion Landscape in the Asia-Pacific Region: A Dozen Key Findings," IMF Working Papers 2019/079, International Monetary Fund.
    3. McLean, Sheldon & Metzgen, Ydahlia & Singh, Ranjit & Skerrette, Nyasha, 2018. "Economic impact of de-risking on the Caribbean: Case studies of Antigua and Barbuda, Belize and Saint Kitts and Nevis," Studies and Perspectives – ECLAC Subregional Headquarters for The Caribbean 43310, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

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