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Remittance focus

Filipe Naigulevu
Friday, February 09, 2018

REMITTANCE flows and correspondent banking relationships (CBRs), including trade finance, are essential to facilitate trade, promote economic activity, and support incomes in the Pacific.

But it has become difficult for some Pacific Island countries to access cross-border financial services with the tightening global standards on anti-money laundering and combatting terrorism financing (AML/CFT).

This is also attributed to high costs and pressure to close the bank accounts of money transfer operators (MTOs) who send and receive remittances.

This has also increased the financial fragility for these countries with cross-border remittance flows and CBRs becoming more concentrated or have been maintained through alternative arrangements in a number of Pacific Islands.

Taking heed of this, the Asian Development Bank, with the International Monetary Fund, are identifying practical solutions to address the costs and risks of transferring remittances to Pacific countries and difficulties in undertaking cross-border transactions. This was done during roundtables in Sydney on February 5 and Auckland on February 7 to 8 which brought together banks, MTOs, and regulators from Australia, New Zealand, and the Pacific.

It also included senior officials from international financial institutions, and training providers to discuss the issue and focus on practical solutions.

While finding solutions will require concerted action by all parties, participants agreed that the roundtables were a first step to address issues and reduce misperceptions. A statement from ADB said a regular dialogue on industry-led solutions may be needed to improve transparency and promote best practices for MTOs.

Meanwhile, a follow-up meeting will be held with Pacific Island authorities in Tonga on March 26 to discuss feasible solutions and training needs for Pacific regulatory and supervisory authorities, banks, and MTOs.

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