Published On: Fri, Nov 4th, 2016

Central Bank and other Latin American banks turn to Swift to combat de-risking threat

Central Bank_frontWILLEMSTAD - Eight Latin American central banks have signed up to adopt Swift's sanctions screening service and KYC Registry in an effort to combat the threat posed to the region by de-risking measures imposed in correspondent banking relationships. The trend of de-risking - the decision taken by banks to partially or fully exit certain jurisdictions, product domains and currencies by exiting their foreign correspondent banking relationships - has been pervasive in Latin America.

By taking up Swift's financial crime compliance services, the central banks of Belize, Bolivia, Costa Rica, Curaçao, Dominican Republic, Ecuador, Haiti and Paraguay, hope to enhance transparency and build greater trust with the international financial community, mitigating the threat of being disconnected by their foreign counterparts.

In addition to adopting the KYC Registry themselves, some of the central banks have also endorsed the uptake of the services across their entire jurisdictions, doubling the number of regional institutions adopting Swift’s financial crime compliance tools over the past 12 months.

“De-risking in some regions has become so extreme that banks are now being challenged to address the problem, and the focus has moved from a commercial issue to one of financial inclusion,” says Fedra Ware, lead compliance services Latin America, Swift. “Implementing the right compliance controls within an organization, as well as ensuring enhanced transparency and collaboration between private and public entities, is critical to avoid being on the receiving end of a de-risking decision.”

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