Global banks have been limiting correspondent banking relationships (CBRs) with local banks in emerging and developing economies – a practice referred to as “de-risking.”  A new World Bank report – The Decline in Access to Correspondent Banking Services in Emerging Markets: Trends, Impacts and Solutions – examines what effect this trend has had on developing countries. The report is based on eight countries in Latin America, sub-Saharan Africa, East Asia and South Asia.

The report says that The International Chamber of Commerce noted that because of Anti-Money Laundering (AML) and know your customer (KYC), 62 percent of participants in a recent survey have declined trade finance transactions, and three-quarters of the banks said that small- and medium-scale enterprises (SMEs) were the most adversely affected customer group.