yandraduth googoolye : the importance of promoting and safeguarding correspondent banking speech by mr yandraduth googoolye, governor of the bank of mauritius, at the correspondent banking academy hosted by standard chartered bank, port louis, 27 may 2019. * * * distinguished guests ladies and gentlemen good morning it is a great pleasure to be in your midst today. i wish to thank standard chartered bank ( mauritius ) ltd for having organized this correspondent banking academy and for inviting me to share my thoughts with you. i understand that the academy was launched in 2015. the standard chartered group has already reached out to more than 1, 000 banks in over 70 countries through such academies. as an internationally active bank with a presence in more than 60 markets around the world, standard chartered bank is an excellent launch pad for this session on correspondent banking. events such as these offer valuable opportunities for stakeholders to engage and share ideas. respondent banks will be provided with unique insights on the expectations of a global player offering correspondent banking services. i would, therefore, urge bankers to make the most of this initiative. it will help them clear out any doubts they may have on correspondent banking facilities. correspondent banking is as old as international finance. it is the lifeblood of international payments and financial flows, and provides vital support to economic growth and development. global trade, remittances, portfolio and direct investment flows, and even humanitarian financial flows across countries are fundamentally dependent on correspondent banking services. today, more than ever, our financial system is inextricably linked with those of other countries. as with any other products offered by banks, the provision of correspondent banking services entails certain risks. these risks stem predominantly from aml / cft. in the recent past, several international banks have been fined heftily for shortcomings in their aml / cft controls and processes. as this line of business carries high volume but a thin margin, many banks have reconsidered their involvement in correspondent banking services. international banks have indicated that the cost of compliance dwarfs the business returns from smaller territories, particularly if these are classified as high - risk clients and deal with high - risk products. the financial stability board had previously highlighted that the corridors for correspondent banking services were shrinking on a global basis. 1 fewer institutions are now providing such services. however, given that the volume of transactions is not declining, this development is increasing the concentration risks posed by the reliance on only a few institutions.

at the level of the bank of mauritius, our approach has been characterized by an open door and open dialogue policy. we are ever ready to have an open dialogue with correspondent banks to explain the supervisory framework in mauritius and give reassurance on its robustness. aml / cft is one of the key priorities for mauritius and the bank of mauritius. as you are certainly aware, the mutual evaluation report ( mer ) of the assessment of the aml / cft measures of mauritius was published by the eastern and southern africa anti - money laundering group ( esaamlg ) in september 2018. the mer revealed that mauritius had not done enough to keep up with the changes which the fatf brought in 2012 to the international standards on combating money laundering and the financing of terrorism and proliferation. following the revision of the fatf recommendations in 2012, the assessment of compliance with the fatf recommendations is not limited to technical compliance and the forty recommendations made. it also involves an assessment of the effectiveness of a country ’ s aml / cft systems with a view to ascertaining whether the country ’ s “ financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism, thereby strengthening financial sector integrity and contributing to safety and security. ” i must say that even before the publication of the mauritius mer in september 2018, mauritius had already started bringing legislative amendments to various pieces of legislation — including the financial intelligence and anti - money laundering act and the banking laws — to address the deficiencies. new regulations were promulgated under the financial intelligence and anti - money laundering act in october 2018, which mirrored the provisions of the fatf recommendations. following these legislative changes, mauritius submitted an application for technical compliance re - rating of 12 recommendations, among which 11 were successfully upgraded. 2 / 4 bis central bankers'speeches just last week¹, two new pieces of legislations were voted at the national assembly. these are the united nations ( financial prohibitions, arms embargo and travel ban ) sanctions bill, and the anti - money laundering and combatting the financing of terrorism and proliferation ( miscellaneous provisions ) bill. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ¹ tuesday 21 may 2019 the legislation reinforces the arsenal of mauritius in the fight against financial crimes. they will support the country ’ s second application for technical compliance rerating on 20 fatf recommendations. these are clear testament of the progress made