5.6.1. Correspondent Banks

The effects of the loss of CBRs:


In order to maintain its profitability, correspondent banking requires a high volume of transactions and operations (Langthaler and Niño 2017). Therefore, one of the reasons why correspondent activities are being retracted is due to this sector experiencing a decrease in returns (Langthaler and Niño 2017). Moreover, some correspondent banks are inefficiently grouping larger proportions of customers as being high risk to minimise risk and avoid potential AML/CFT scandals. This leads to such customers losing access to invaluable banking services which they require (Langthaler and Niño 2017, as affirmed by the World Bank 2015, p. 29).

Given the potential damage to reputation and balance sheet from any enforcement case, firms seek to avoid any counterparties or jurisdictions where there is uncertainty.
