Back Matter
  • 1 https://isni.org/isni/0000000404811396, International Monetary Fund

References

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1

The authors are grateful to the Pacific country authorities for their input and to the IMF country teams for their survey responses, comments, and discussions. The authors also gratefully acknowledge inputs from Serkan Arslanalp, Matthias Emmanuel, Jonathan Pampolina, Scott Roger, and the members of the IMF Interdepartmental Working Group on Correspondent Banking Relationships for their useful comments. Tlek Zeinullayev, Gabriel Alvim, and Kathie Jamasali provided excellent research and administrative assistance.

2

The Pacific island nations examined in this paper includes Fiji, Kiribati, the Marshall Islands, Micronesia, Palau, Papua New Guinea, Samoa, the Solomon Islands, Tonga, Tuvalu, and Vanuatu.

3

Money transfer operators are an important part of shadow banking in the Pacific islands.

4

While high levels of remittances per se do not pose an AML/CFT risk, the large volume of typically small transactions increases the monitoring costs. In a number of instances, the remittance sector has been associated with terrorism financing; in applying the risk-based approach banks are subjecting the remittance sector to enhanced scrutiny.

5

The Foreign Account Tax Compliance Act (FATCA) is a U.S. law designed to prevent tax evasion by U.S. citizens using offshore banking facilities.

6

A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central authority. A Know Your Customer utility is a central repository or database that stores the data and documents needed for a financial institution’s customer due diligence procedures.

7

The US authorities clarified this position and issued the joint Foreign Correspondent Banking Factsheet in August 30, 2016.

8

See Jamaludin and others (2016) for more information on the banking system in the small states of the Pacific.

9

See Box 2 for recent activities taken by the Marshallese authorities.

10

See Reserve Bank of New Zealand (2015), Statement about Banks Closing Accounts of Money Remitters.

11

IMF member countries in the Melanesia region are Fiji, Papua New Guinea, the Solomon Islands, and Vanuatu; Micronesian members are: Kiribati, the Marshall Islands, Federated States of Micronesia, and Palau; and Polynesian member countries are Samoa, Tonga, and Tuvalu.

12

Most respondents had been in operation for more than 5 years (65 percent); money transfers were their core activity (85 percent); had no adverse AUSTRAC opinion/conditions (94 percent); and had conducted an independent review of their business (63 percent).

13

Buckley and Ooi (2014) also point out that there is ample anecdotal evidence on the closure MTO accounts by banks across both Australia and PICs; and these account closures have been reported on and criticized by industry professionals, regulators, academics, and industry experts.

14

The analyses on remittance cost use the Remittance Prices Worldwide database (World Bank). More information available at http://remittanceprices.worldbank.org.

17

The Pacific islands registered the fastest growth rate in unique mobile telephone subscribers during 2009, at 13 percent, second only to Sub-Saharan Africa (15 percent). See GSMA Intelligence (2016).

19

Financial Stability Oversight Council 2016 Annual Report.

Challenges in Correspondent Banking in the Small States of the Pacific
Author: Jihad Alwazir, Mr. Fazurin Jamaludin, Dongyeol Lee, Niamh Sheridan, and Ms. Patrizia Tumbarello