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| A customer receives U.S. notes from a teller at the Dahabshill money transfer office in capital Mogadishu February 16, 2015. REUTERS/Omar Faruk |
Global regulators will try to get more insight into why major banks are withdrawing from handling cross-border payments, making it harder for people to send money to relatives and loved-ones abroad.
Banks say it has become more costly to comply with tougher customer checks against money-laundering and terrorist financing, putting pressure on regulators to ease up.
The Financial Stability Board (FSB), which coordinates regulation across the Group of 20 economies (G20), says it is worried that fewer major banks are offering smaller banks correspondent relationships, the links which enable such remittances.
Banks' reluctance to handle smaller cross-border payments could drive some flows underground, potentially hurting economic growth and hampering financial inclusion, as well as damaging the stability and integrity of the financial system.
The FSB set out in March 2016 to implement an action plan.
"The FSB has identified... some areas where additional data and information is necessary to assess the scale of withdrawal from correspondent banking," it said on Thursday in an update on efforts to stop the decline in correspondent banking.
For example, the IMF has noted that in the Caribbean region at least 16 local banks have lost some or all of their correspondent banks.
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