Seventh Annual Arab – Cypriot Forum
Investigating the Global Decline in Correspondent Banking Relationships & Complying with AMLD6 and AMLA 2020

Background:

Flows of dirty money can damage the stability and reputation of the financial sector and threaten the local markets, and terrorism shakes the very foundations of every society. The soundness, integrity and stability of banks and financial institutions and confidence in the financial system as a whole could be seriously jeopardized, add to that the De-risking pattern adopted by Correspondent banks, therefore putting countries and their banking and financial systems in an extremely delicate situation.

Over the last decade, global banks have been tightening operations to comply with regulations designed to curtail money-laundering and terrorism-financing. As a consequence, global banks have been limiting correspondent banking relationships (CBRs) with local banks in emerging and developing economies – a practice referred to as “de-risking.” 

Certain global banks have terminated relationships – or “de-risked” – certain local banks, but they have also established new relationships with other banks in the same countries. The idea that country risk is the primary consideration doesn’t hold. Local (respondent) banks have been able to adjust by dealing with fewer correspondent banks or by establishing new relationships, which in some instances are with second or third-tier banks, which raises concerns about integrity that warrant authorities’ attention.

Moreover, new and updated AML/CFT regulations were released by both the United States of America and the European Union; On January 1, 2021, the US Congress passed the Anti-Money Laundering Act of 2020 (AMLA) as part of the National Defense Authorization Act for Fiscal Year 2021. Likewise, as of December 3rd, 2020, the European Union’s Sixth Anti-Money Laundering Directive (AMLD6) is in effect for all member states. Regulated entities operating in the union will need to be compliant by June 3, 2021. Like its predecessor, this new directive is aimed to strengthen anti-money laundering (AML) rules in the union and place larger responsibility on regulated entities to fight money laundering. Specifically, the directive aims to expand the scope of existing legislation, clarify certain regulatory details and toughen criminal penalties.

In this regards, the World Union of Arab Banks through The Seventh Annual Arab-Cypriot Forum, is always keen to join efforts with international bodies and entities to safeguard the Arab – Cypriot Banks and financial institutions from potential threats and challenges and introduce the state of art means of combating these threats while abiding and complying with the regulatory framework and international best practices. The Arab – Cypriot Forum has been accurately structured to showcase and highlight the future prospects and opportunities by providing ample time and natural situations for networking it provides an open platform for Arab and Cypriot compliance professionals to meet, discuss and share the knowledge and experience through conversations, interactive panel discussions, and presentations at a world-renowned gathering of industry professionals and thought leaders on topics.

Topics of Discussion:

Investigating the Global Decline in Correspondent Banking Relationships

• Withdrawal of correspondent banking relationships linked to de-risking: highlighting the increasing regulation, operational cost and market competition impact banking and international trade.

Actions that countries and the industry can pursue to limit de-risking

• Gather data on CBR closures, industries and activities affected by de-risking
• Encourage at-risk respondent banks to include de-risking in contingency planning as part of the prudential requirements and supervisory practices
• Improve communication between correspondent and respondent banks, as a lack of awareness of country context can contribute to de-risking
• Improve regulatory oversight of MTOs’ obligations toward AML/CFT
• Consider technology as a solution to de-risking, since FinTech could lower the cost of compliance, reduce cash transactions and improve transaction monitoring.

Sixth Anti-Money Laundering Directive (AMLD6) – Proactive Planning and Implementation

• 6AMLD implementation experiences from European financial services businesses
• Lessons Learned from the five previous Anti-Money Laundering Directive (AMLD)

The US Anti-Money Laundering Act (AMLA) of 2020

• Modernization and Reforms of AML/CFT Laws and Regulations
• Major Changes to the AML/CFT Landscape
• Enhanced AML Whistleblower Program
• Increased Penalties for AML Violations

Who can attend?

• Bank CEOs and managing Directors
• Compliance Managers
• AML operations and compliance team
• Customer due diligence
• Transaction monitoring and system tuning
• AML audits

Forum Techniques:

The forum employs a mix of theoretical fundamental explanations and case studies, with special focus on exchanging knowledge and experiences.

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