Brad Smith, the Acting Under Secretary for Terrorism and Financial Intelligence at the U.S. Treasury, addressed a roundtable with the Pacific Banking Forum and the Government of Australia. Smith emphasized the importance of financial intelligence in combating illicit finance threats, which he described as crucial to safeguarding both U.S. and international financial systems.
Smith highlighted the intersection of combating illicit finance and promoting financial inclusion. He expressed gratitude to participants for their efforts and specifically thanked Australian counterparts for co-hosting the event.
Financial inclusion was underscored as a driver of economic development and stability. Smith pointed out that correspondent banking is vital for international trade by facilitating lower-cost transactions across borders. However, he noted that the Pacific region has experienced a significant withdrawal of correspondent banking relationships due to limited profitability, higher costs, lack of scale, and uneven anti-money laundering effectiveness.
"The United States is committed to an Indo-Pacific that is free and open, connected, prosperous, secure, and resilient," Smith stated. He mentioned commitments made by President Biden and Prime Minister Albanese to work with Pacific Island countries through initiatives like the Pacific Banking Forum.
Smith reported ongoing efforts since meetings in Brisbane to address correspondent banking challenges. He stressed the importance of reaffirming commitments made earlier this year and providing updates on progress.
The World Bank's project aimed at providing an emergency backstop for correspondent banking services was mentioned as a potential solution to de-risking issues. Smith announced that President Biden intends for the U.S. to contribute $1.5 million to support these efforts.
In closing remarks, Smith reiterated Treasury's commitment to working with partners in the region on technical assistance missions and engaging with banks and regulators to support correspondent banking growth in the Pacific.
"Collaboration and collective action among public and private stakeholders remains the most effective path," he concluded.
