World Bank warns about reduced access to banking services

Nov 25, 2015

It said services to money-transfer operators have become "increasingly limited".

Large global banks are restricting banking services in several parts of the world to minimise risk exposure, according to the World Bank.

The institution said in a press release it has carried two surveys which revealed that services to money-transfer operators in particular have become "increasingly limited".

"The findings show that access to financial services for local and regional banks and remittance providers is contracting in some countries and regions and that business lines such as cheque clearing, international money transfers, and trade finance are being affected," the bank explained.

It said that in most cases, these restrictions are largely driven by commercial decisions as well as legitimate concerns about money laundering and terrorism financing risks.

However, it added that some banks appear to be cutting off business relationships with entire classes of customers based on the country or type of financial service - rather than implementing a risk-based approach.

"Now that we have evidence that large banks are reducing services to correspondent banks and remittance providers, the private and public sectors need to come together to find practical and fact-based solutions. There is a real risk that turning away customers could actually reduce transparency in the system by forcing transactions through unregulated channels," said Gloria Grandolini, senior director at the World Bank Group.

She added that the loss of correspondent banking services can lead to financial exclusion, particularly where it affects remittance providers.