HIGH LEVEL EVENT ON CORRESPONDENT BANKING RELATIONSHIPS
27-28 March - Sydney, Australia
Opening Remarks - Pacific Islands Forum Secretary General, Henry Puna
Salutations
• Hon Dr Teuea Toatu, Vice President and Minister for Finance, Kiribati
• Hon Panapasi Nelesoni, Deputy Prime Minister and Minister of Finance and Development of Tuvalu
• Hon John Dahmasing Salong, Minister of Finance and Economic Management of Vanuatu
• Stephen Ndegwa, World Bank Country Director for PNG & Pacific Islands
• Jean Pesme, World Bank Global Director for Finance & Innovation
• Central Bank Governors and Banking Commissioners
• Development Partners
• Representatives of the private sector
• Members of the Diplomatic Corp,
• To everyone here,
I’d like to begin by acknowledging the Traditional Owners of the land on which we meet today. I would also like to pay my respects to Elders past and present.
Kia Orana, Bula Vinaka, Gidday to you all.
2. It is my distinct pleasure to welcome you all to this High-Level Event on Correspondent Banking Relationships (CBRs) in the Pacific. On behalf of the team, let me say how excited and happy we are to collaborate with the World Bank in co-hosting this timely event around an issue that has been around for some years now. I’m so glad to see it’s finally getting the attention required, so thank you once more for joining us today.
3. We gather here as critical partners to share our experiences in our national and regional efforts to address the decline in correspondent banking relationships in our region. I believe, by the end of the next two days, we would have used this crucial opportunity to delve into the challenges and opportunities concerning these challenges and come up with new ideas and mechanisms to ensure we all leave with some solid next steps which can mitigate the broader impacts of current work around anti-money laundering and combatting the financing of terrorism in the Pacific.
4. Correspondent banking relationships play a pivotal role in facilitating cross-border payments that fosters economic growth through investments, trade facilitation and remittances for smaller, open Pacific economies.
5. Over the last decade, we have all seen the significant global decline in correspondent banking relationships. For the Pacific the challenges for developing and newly developed small Pacific Island Countries are more acute. As we have been warning for quite some time, the impacts can be destructive.
6. Samoa, Tonga, and Vanuatu rely heavily on foreign currency inflows, such as remittances to households, official development assistance and tourism receipts. Their local banks are often relatively small or need offices abroad to offer cross-border payment services themselves.
7. Remittances from the Pacific diaspora and seasonal workers are a vital source of revenue for households and contribute significantly to the Gross Domestic Product for some of our smaller economies.
8. However, the impact of the decline in CBR on the cost of remittances is considerably high for the Pacific compared to Southeast Asian countries. For Fiji, Samoa, Tonga and Vanuatu, the cost of remittances range between 7.4% to 9.1% according to the Forum’s World Bank Study compiled in 2023.
9. While the reasons for the decline in CBRs are many – the “perceived risks” regarding AML/CFT on smaller countries places the Pacific in a precarious situation; not to mention the lack of economies of scale in the islands, the high cost of compliance and conformity to international standards despite the smaller volumes of transactions.
10. Let us be in no doubt – the Pacific is firmly behind global efforts to find solutions for global problems. I recognise there is no silver bullet that exists to address the impact on correspondent banking relationships of the way we are responding to global anti money laundering and combatting finance flows for terrorism. If there was one, we would not be here today.
11. So, I am really pleased and encouraged that this gathering is taking place amongst policy makers, regulators, the private sector and development partners. It demonstrates and reaffirms that we need a concerted, multi-faceted and a coordinated approach to address this issue.
12. Let us all work together to identify possible long-term solutions to address the decline in correspondent banking relationships, alongside measures for anti money laundering, and combatting financing for terrorism.
13. I would like to express my sincere gratitude to the Government of Australia and the Government of New Zealand for your continuous support to this work at the Forum Secretariat.
14. The involvement of the United States Treasury Department is also very critical, and I am excited that this month the Pacific Islands Forum signed a formal MOU partnership for the US to support this work.
15. I also want to sincerely thank the World Bank for the ongoing collaboration in making this event possible and I look forward to our continued cooperation in this and other matters in the future.
16. I know there will be some great decisions, ideas and networks made in the coming days. That is exactly what we need as we move towards convening the world’s first Pacific Banking Summit, later this year.
17. Make no mistake, the decline in CBR in the Pacific only adds to the geopolitical contestations in the region. Every effort must be genuine, sincere and addresses the fundamental challenges of CBR.
18. To this end, I take this opportunity to emphasise the spirit of the 2050 Strategy for the Blue Pacific Continent endorsed by Forum Leaders – we must not leave anyone behind in all of what we do.
19. I look forward to successful outcomes that will undoubtedly contribute to the well-being of our Pacific people, securing a Pacific future for all.
20. Meitaki ma’ata, Vinaka vakalevu, thank you.
