By harnessing AI-driven regulatory risk assessment with the use of Large Language Models (LLMs), financial institutions, regulators, and policymakers can synthesize fragmented regulations, identify emerging risks, and deliver comparative insights across jurisdictions to enhance transparency, efficiency, and accuracy in assessing international standards, compliance frameworks, and anti-money laundering (AML) obligations.
As AI-powered analytics continue to evolve, they hold the potential to transform how regulatory frameworks are assessed, aligned, and implemented globally. This shift will foster a more resilient, adaptive, and risk-sensitive financial ecosystem, ensuring the preservation of Correspondent Banking Relationships (CBRs).
Two decades ago, correspondent banking was widespread, even among smaller banks, due to lower compliance requirements. Today, stricter regulations, higher costs, and increased risk have made it much harder for banks to maintain these relationships. Even larger banks struggle to serve certain customers.
Despite this growing demand, several regions have been disproportionately affected by the global trend of financial institutions scaling back or exiting correspondent banking. The Pacific region, for example, has experienced the highest rate of CBR withdrawals worldwide, leading to a concentration of remaining relationships within a few banks. This consolidation significantly heightens the risk of a complete loss of CBRs in some Pacific Island countries (PICs).
Different countries have different and evolving regulatory frameworks, making it complex for banks to ensure regulatory compliance.
To drive regulatory alignment, the adoption of AI and policy analysis is essential. This session will explore how AI-powered solutions can help key stakeholders—including banks, regulators, policymakers, and standard setters—analyze vast and changing requirements to tackle the root causes of de-risking, enhance transparency, and restore and secure confidence in Correspondent Banking Relationships (CBRs). By leveraging these solutions, stakeholders can strengthen trust, improve regulatory efficiency, and ensure that CBRs continue to support essential cross-border banking services such as remittances, trade finance, and payment systems, safeguarding access for vulnerable economies.
