As Prepared for Delivery
Good morning, it’s great to be here with you all in Brisbane. I am Brian Nelson, the U.S. Treasury’s Under Secretary for Terrorism and Financial Intelligence. The offices I lead deploy the United States’ financial intelligence, regulatory, enforcement, and accountability tools to combat terrorist financing, money laundering, and other urgent illicit finance threats.
This work is critical to safeguarding the U.S. and international financial systems from those who misuse it and undermine U.S. national security. It is one of the Treasury Department’s core missions, along with advancing a strong economy that promotes growth, fairness, and opportunity for all.
I am joining you here today to discuss how these two missions intersect and how we can collectively take steps to safeguard our financial systems while also promoting greater financial inclusion and integration.
As we will discuss over the next two days, the importance of advancing these two missions is apparent in the Pacific, where the evolution of certain correspondent banking relationships has undermined financial access and stability among some Pacific Island countries.
This worrying trend of financial sector de-risking was a key theme of Prime Minister Albanese’s visit to Washington last October, and it is one that we are committed to working with partners to address.
We recognize the economic and strategic significance of the Pacific region, and we are committed to deepening our engagement and collaboration with our allies and partners to bolster financial connectivity, investment, and integration.
That is why we have gathered here this week: to convene government and the private sector in order to advance creative, collective solutions for combatting de-risking in the Pacific.
To kick us off, I will offer a few reflections on how the Treasury Department understands and is working to address this challenge before describing steps we are taking at home to strengthen our AML/CFT regime in order to safeguard the U.S. and international financial systems.
The rest of the U.S. Treasury team and I look forward to working with you on these issues as well as hearing expert views and approaches that we all bring to the table.
Financial Integration
International financial integration is a key driver of economic development, opportunity, and stability. Across countries and regions, we have seen over decades the varied ways in which this integration—often enabled by correspondent banking relationships—has created conditions for strong, sustainable economies.
By linking countries’ economies to the global financial system—and particularly the U.S. financial system—correspondent banking has contributed significantly towards healthy market competition in the financial services sector.
Correspondent banking has helped bolster international trade by reducing financial friction allowing quick low-cost transactions across borders. At a macro-level correspondent banking has facilitated large-scale foreign investment including financing infrastructure development projects while making countries’ financial systems more resilient. At a micro-level correspondent banking has helped individuals affordably send funds including remittances across borders.
Beyond economic benefits correspondent banking relationships help funnel cross-border activity through regulated channels decreasing AML/CFT risk putting downward pressure on unregulated money transfer markets.
There is much gained promoting global integration but conversely when relationships dwindle consequences can be substantial.
Last year Treasury released its De-Risking Strategy studying institutions terminating restricting business indiscriminately broad categories rather than analyzing managing risks aligned regulatory obligations highlighting serious harms caused by de-risking occurring impeding access inclusion driving activity into unregulated inhibiting investment trade undermining stability resilience
De-Risking in The Pacific
Many represented here familiar damage done recognizing committed addressing bank de-risking across Pacific sharing concerns experiencing declines correspondent relationships globally vast dispersed geography critical clearing exchange payments promoting trade facilitating remittance flows making difficult expensive banks offering services islands data suggests past decade declined twice rate terminations calamitous receiving approximately 10 percent GDP form personal remittances undermining resilience some having only one correspondent bank becoming critical macro-economic jurisdictions hanging single thread
Strengthening AML/CFT Frameworks
Story not only about AML/CFT risk preventing taking strengthening frameworks increasing willingness providing attractive foreign investment development financing trade significant vulnerabilities undertaking historic reforms safeguarding clarifying obligations speaking length initiatives highlight efforts particular January FinCEN operationalized beneficial ownership e-filing accepting reports framework requiring companies reporting information individuals ultimately owning controlling increasing corporate transparency addressing deficiency regime preventing misuse anonymous companies advancing vital reforms increasing transparency residential real estate market investment adviser sectors exploited launder hide proceeds corruption fraud sanctions evasion published proposed rules February finalizing third proposed rule FinCEN earlier week revisions program requirements aims flexible managing mitigating prioritizing highest-risk customer activities encouraging obligations risks formalize explicitly requiring conducting assessments basis broader important first step multi-year effort effective risk-based flexible significant updates decades safer flexible effective explaining initiatives clarifying regulatory obligations proposing put giving confidence efforts managing avoiding risk
Pacific Banking Forum
Efforts strengthening regimes important combatting easy straightforward solutions addressing especially vast diverse collaboration collective action public private stakeholders most effective path categorical termination logic informs forum bringing together representatives different perspectives discussing creative solutions addressing shared goal architecture broad inclusive frictionless access forging partnerships frameworks delivering vision thank you
