A two-speed approach to arrest the decline in correspondent banking relationships is emerging, an influential monitoring group warned on Wednesday, with some jurisdictions making leaps in regulatory oversight of money remitters while others have made scant progress.
Banks in developed economies have jettisoned relationships with remittance providers over concerns they present a high risk in terms of money laundering and terrorist financing, a practice known as de-risking.
Cheap and timely remittance payments from citizens working abroad are seen as a crucial path through which many poorer economies can fast-track growth, but this has long been threatened by banks’ aversion to the low-margin sector.
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