Fitch Ratings has published its views on the focus of the focus on misconduct adopted by the Financial Stability Board, the international body that monitors and makes recommendations about the global financial system.
The ratings agency recognises the FSB’s plans to address the unintended negative consequences of increasing anti-money laundering (AML) and sanctions pressure on banks.
In its comments, Fitch cites research from the International Chamber of Commerce across 298 banks in 127 countries indicates that AML and KYC requirements had an impact on trade finance, with 68% of surveyed banks declining transactions in 2013 and almost a third closing down correspondent account relationships.
But the ratings agency does not offer a view as to whether the FSB’s focus on financial inclusion will actually stem or reverse the erosion of correspondent bank networks, particularly in emerging markets.
The FSB’s focus on misconduct could, over time, improve the predictability of conduct sanctions for banks and reduce the likelihood of unexpected extreme sanctions, the ratings agency says
But it says it is unclear whether the FSB’s efforts will include the US Department of Justice, which has so far levied the largest fines, and other law enforcement agencies.
The ratings agency’s comments can be found here.
Categories: Trade Based Financial crimes News