Correspondent banking relationships are in decline. Between 2009 and 2016 they fell by 25%, according to research published earlier this year by compliance software company Accuity. That fall was all the more striking considering that the number of global bank locations increased by 20%.
Global firms want to work with local banks, but they fear the hefty cost of regulatory compliance. In 2014 alone, banks paid out $10 billion in fines relating to anti money-laundering (AML) regulation, according to the US Department of Treasury.
Banks feel their hands are tied, argues Etienne Bernard, global head of transaction banking at Crédit Agricole, with the burdens on them not fully understood by the authorities that impose them.
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Etienne Bernard, |
“There needs to be greater transparency regarding some regulatory requirements banks are facing in transaction banking," he says. "There is a need to help to continue to be within these requirements so that a lack of understanding does not lead to [the banks] stopping doing business.”
Anand Pande, global product chair of trade and supply chain finance at banking platform provider Intellect and founder of The Growth Paradigm Partnership, says there has been a wariness of doing business with correspondent banks.