The Basel Committee on Banking Supervision has outlined clearer guidance for banks on how to manage risks related to money laundering and the financing of terrorism in correspondent banking.

Aim to stop banks 'de-risking'

These proposals are a revision of the Basel Committee's guidelines on the Sound management of risks related to money laundering and financing of terrorism, which were first issued in January 2014 and revised in February 2016.

The aim of the revision is to ensure that banks conduct their correspondent banking business “with the best possible understanding of the applicable rules on anti-money laundering and countering the financing of terrorism”. The proposals address concerns that banks are withdrawing from correspondent banking in order to avoid certain risks. This could affect international payments in entire regions, says the Basel Committee.

Varying levels of risk in correspondent banking

"The proposed revisions develop the application of the risk-based approach for correspondent banking relationships, recognising that not all correspondent banking relationships bear the same level of risk," the report says.

Comments on these draft proposals should be received by 22 February 2017. 

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CTMfile take: These revisions on the risk-based approach for correspondent banking relationships come on the heels of the Financial Action Task Force (FATF)'s own guidance on correspondent banking services, which was published last month. There is obviously concern in the international banking and business community that 'de-risking' in correspondent banking could seriously impair the reach of global payments netowrks in some regions.