ABSTRACT
This chapter presents evidence relating to the erosion of access to financial services, money laundering compliance and related matters in the Pacific island countries as well as the potentially negative impact of the developments on the financial sector and macroeconomy of the countries. It suggests that the collective efforts needed to address the consequences of withdrawal of corresponding banking relationships and outlines policy measures to help the affected countries mitigate the impact. The chapter examines developments in correspondent banking relationships (CBRs) and focus on the consequences of strained CBRs for remittance channels. It draws on findings from extensive discussions in Australia, New Zealand, and Samoa with regulators, banks and banking associations, and Money transfer operators. The chapter discusses the impact to date on the financial system and the economies of the small states of the Pacific. It reviews the main strategy, emphasizing the need for collective action and steps by global, regional, and domestic regulators and standard-setters.
