3,300pc surge since 2009 amid vac­uum cre­ated by Western lenders

New Straits Times - - Business -


CHI­NESE banks have dra­mat­i­cally ex­panded their over­seas pay­ment and trade net­works since the global fi­nan­cial cri­sis, ex­ploit­ing a grow­ing vac­uum cre­ated by Western lenders, which are re­treat­ing from higher-risk ju­ris­dic­tions, new data shows.

The num­ber of so-called “cor­re­spon­dent” or bank-to-bank re­la­tion­ships op­er­ated by Chi­nese banks surged more than 3,300 per cent — from 65 in 2009 to 2,246 last year — ac­cord­ing to data pub­lished by United States­based pay­ment and com­pli­ance tech­nol­ogy com­pany Ac­cu­ity yes­ter­day.

This con­trasts with a 25 per cent drop in the num­ber of cor­re­spon­dent bank­ing re­la­tion­ships glob­ally dur­ing the same pe­riod, largely caused by US and Euro­pean banks cut­ting ties with smaller bank clients in re­gions such as Asia and Africa.

Cor­re­spon­dent bank­ing de­scribes bank-to-bank re­la­tion­ships that al­low in­di­vid­u­als and com­pa­nies to move money around the world, fa­cil­i­tat­ing global trade.

Although Chi­nese cor­re­spon­dent bank­ing re­la­tion­ships have grown from a low base and still ac­count for a small pro­por­tion of such re­la­tion­ships glob­ally, the huge jump un­der­scores how Chi­nese lenders — such as In­dus­trial & Com­mer­cial Bank Of China and Bank of China — are fast-glob­al­is­ing to sup­port Chi­nese com­pa­nies as they push over­seas.

Ac­cu­ity com­piled the data, which was ex­tracted from stan­dard settlement in­struc­tions, from an av­er­age of 29,000 banks in 238 coun­tries or ter­ri­to­ries across the world.

Global banks are un­der in­tense reg­u­la­tory pres­sure to guard against money laun­der­ing and ter­ror­ist fi­nanc­ing by closely screen­ing the source of funds they han­dle.

US watch­dogs had dished out more than US$16 bil­lion (RM69.28 bil­lion) in fines for anti-money laun­der­ing (AML) com­pli­ance fail­ings since the end of 2009, while banks glob­ally spent an es­ti­mated US$12 bil­lion on AML com­pli­ance pro­grammes last year, ac­cord­ing to data com­piled by Quin­lan & As­so­ci­ates. Reuters


The In­dus­trial & Com­mer­cial Bank Of China are among banks ex­pand­ing their in­ter­na­tional pay­ments net­works to sup­port Chi­nese com­pa­nies as they push over­seas.

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