FINANCIAL SERVICES | Staff Reporter, Singapore

Singapore adopts standards for cross-border payments

MAS supports the initiative to o help arrest the decline in correspondent banking relationships.

The Monetary Authority of Singapore (MAS) is supporting the Correspondent Banking Due Diligence Questionnaire (CBDDQ) by banking association Wolfsberg Group. According to an announcement, it supported the initiative "to help arrest the decline in correspondent banking relationships and enhance banks’ ability to provide cross-border financial transactions."

The CBDDQ will enable banks to more efficiently enter cross-border correspondent banking relationships. "The Financial Action Taskforce had previously clarified that while its standards require correspondent banks to assess respondent banks’ risks and control practices, correspondent banks do not have to conduct customer due diligence on the customers of their respondent banks.," MAS said.

It added that the latest questionnaire from the Wolfsberg Group supports the FATF guidance by standardising the information that correspondent banks should ask of respondent banks, to assess the latter’s risks and controls, when opening a correspondent relationship. 

MAS assistant managing director Ho Hern Shin commented, “The CBDDQ will enhance global access to finance and promote trade. We urge banks in Singapore to incorporate the questionnaire into their risk assessment process for setting up cross-border correspondent banking relationships.” 

MAS noted that correspondent banking relationships, which allow banks to access financial services in jurisdictions outside their own and to provide cross-border payment services to their customers, have been declining in recent years, partly due to banks tightening anti-money laundering controls.

"Firms in impacted countries have been unable to send and receive international payments. This has, in turn, adversely affected trade and financial inclusion," it added.

The Wolfsberg Group is an industry association comprised of 13 global banks that aim to develop frameworks and guidance for the management of financial crime risks, know your customer (KYC), anti-money laundering and countering the financing of terrorism (AML/CFT) policies.

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