Compliance Challenges and Strengthening Correspondent Banking Relationships


Compliance Challenges and Strengthening Correspondent Banking Relationships

UAB Activity

Banks and financial institutions around the world are facing increasing and complex regulatory requirements and increased scrutiny of their compliance frameworks, particularly with regard to AML/CFT issues. This complex and highly demanding global regulatory environment places more requirements on correspondent banks. At the same time, it leads to a dilemma of how banks can meet compliance requirements on the one hand, and expand financial inclusion, financing small and medium-sized enterprises and entrepreneurs, facilitating remittance flows, and financing trade and investment, on the other hand.
The international legislative and regulatory pressures over the past years have led to the emergence of the de-risking phenomenon, whereby many international correspondent banks have cut completely the relationships with countries, regions, or banks, whether based on compliance considerations and concerns about money laundering and terrorism financing risks, or for cost-benefits considerations associated with providing correspondent banking services.
These measures have deprived geographical, economic, and social sectors of financial services, especially with regard to cross-border money transfers and remittances. Some evidence indicates a possible return of the de-risking phenomenon and cutting correspondent banking relations, as a result of the international banks’ concerns about the inability of local banks to meet the new compliance requirements, also the inability of national supervisory bodies to periodically carry out inspections and audits within banks due to social distancing necessities, and where some of these processes and procedures are executed remotely, which may lead to additional challenges in the monitoring and auditing processes. Consequently, the international correspondent banks may cancel or freeze their relationships with countries or banks because of mounting concerns about the inability of banks (as well as the supervisory and regulatory authorities) to meet their requirements.
In light of the fears of declining confidence by international correspondent banks in compliance procedures and combating financial crimes carried out by national banks and supervisory bodies, and the possibility that the Arab region will be exposed to cutting correspondent banking relations, the Union of Arab Banks seeks to hold a forum entitled “Compliance Challenges and Strengthening Correspondent Banking Relationships”, with the aim of shedding light on the new requirements of correspondent banks and the challenges in combating financial crimes and cyber security risks arising from remote working and the expansion of financial technology. In addition to risks related to the Arab region, which leads to an increase in reputation risk.

This forum constitutes a high-level platform that brings together high-level representatives from Arab and international financial and regulatory bodies, to discuss the international legislative and regulatory developments, and the possibility of the emergence of a de-risking phenomenon. The forum also seeks to discuss the current banking measures to enhance monitoring and compliance. In addition, the regulatory authorities’ policies aimed at maintaining robust audit and control procedures will be highlighted.

Topics of Discussion:
– The reality of Arab banking relations with correspondent banks and their implications for the Arab banking and financial sector.
– Corresponding banking relationships, de-risking, their link to financial crimes, and the means to enhance these relationships.
– Challenges and opportunities for Arab banks to understand and meet the expectations of the US regulatory authorities and correspondent banks.
– Obligations arising from the Security Council resolutions related to combating terrorism financing and proliferation of weapons of mass destruction financing, and the risks arising from non-compliance.
– The role of regulatory and supervisory authorities and financial investigation units in combating financial crimes and protecting the integrity and stability of financial systems.
– The challenges of achieving a balance between developing innovations in the financial and banking sector and enhancing compliance with legislations and controls.
– Confronting money laundering and terrorist financing operations associated with the digital payment systems and the use of modern technologies.
– Anti-money laundering and terrorism financing requirements in foreign trade operations.
– Shadow banking: mechanisms, challenges, risks, and impact on the banking system.
– The international classification of Arab countries risks from the perspective of combating money laundering and terrorism financing (for discussion)
– Data protection in banks and cyber security.

Forum structure:
– Presenting working papers and holding in-depth discussion sessions by a selected and distinguished group of experts from the banking and financial sectors, who are well-known at the regional and international levels.
– Organizing an exhibition accompanying the forum’s activities, including sponsoring institutions and firms, constitutes an opportunity to establish and develop business relations.

Target participants:
– Leaders of Arab banks
– Managers and employees of bank supervision and control
– Managers and employees of the compliance department and their main associates
– Heads of anti-money laundering and terrorism financing units and their main associates
– Credit managers and officers and their main associates
– Heads of internal control and their main associates
– Heads of risk management and their main associates
– Heads of financial control departments and their main associates
– Heads of financial departments and their main associates
– Heads of internal audit and their main associates
– Heads of information security and their main associates
– Branch managers and their main associates