Correspondent banking – the global network of relationships that facilitates the transfer of funds between financial institutions across borders – has attracted the attention of lawmakers and enforcement officials for years.
The insufficiency of information on respondent banks, their customers and the relationship between them presents a jigsaw puzzle to those attempting to analyze this information – making correspondent transactions and relationships vulnerable to fraud, and a potential conduit for terrorist financing.
To combat this threat, global financial institutions are “de-risking” and preventing customers from transferring funds overseas, without conducting a comprehensive assessment of their level of risk or risk mitigation measures for these customers. Unfortunately, the adverse effect of de-risking causes a threat to families and NGOs across borders who rely on these cross-border money transfers.
According to PwC’s recent report, instead of de-risking, it’s critical for financial institutions to leverage a combination of analytics approaches to meet these surveillance challenges. These effective controls can make this business viable from both the compliance and profitability standpoints.
Read the full report here.