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Teaser:
A daunting challenge faced by financial institutions
in the Caribbean in recent years is the growing trend
being adopted by large global banks that serve as
correspondent banks to local financial institutions, to
severely limit or terminate their correspondent banking
relationships (CBRs) with these local or regional banks
(respondent banks). This practice is considered a form
of “de-risking”, whereby business relationships with
clients or categories of clients considered “high-risk”
are restricted or terminated. So far, financial institutions
in 12 Caribbean countries have had the CBRs of at least
one of their local banks terminated or “de-risked”.
Related Content:
ECLAC report considers the use of blockchain technology to combat de-risking
Recent developments in the field of financial technology (FinTech) may offer potential solutions to some of the problems surrounding de-risking and the navigation of correspondent banking relationships.