Dr. Joseph Torbey
Chairman General Manager
Credit Libanais Banking Group
& Chairman World Union of Arab Bankers
US – Middle East North Africa (MENA) Private Sector (PSD) on:
“Correspondent Banking”
14th – 15th of October 2014 BNY Mellon Premises
New York – USA
Excellencies,
Ladies and Gentlemen,
Allow me to start by thanking the U.S. Treasury Department, the Federal Reserve Bank of New York, and the “Arab Bankers Association of North America”. I also seize this opportunity to thank the Bank of NY Mellon for their great support, as well as all distinguished guests from the public and private sectors, the U.S. and Arab banking sectors, in addition to government officials and central bank governors.
As we convene today, the MENA region continues to undergo severe political and security turbulences that cause the depletion of resources in many Arab countries, where some of the Arab banks operate in tough working conditions.
Yet, not all our region is synonymous with violence and conflict. Arab Banks located away from the turmoil enjoy sound liquidity and profitability levels and operate in favorable economic conditions. Arab banks, in fact, play a dynamic and vital role in the life of their communities: they drive growth and businesses, and enable millions of Arabs to achieve their goals, since they constitute not only the backbone of local economies, but the real drivers and vital veins for development and stability.
In 2014, the engagement of 430 (four hundred thirty) dynamic Arab banks ensured the growth of the vibrant communities in the MENA region: consolidated assets of Arab banks amounted to 3 trillion USD, deposits reached 1.80 trillion USD, and facilities pumped in the economy rounded 1.6 trillion USD. Growth rate of the Arab banking sector is estimated at 3 times the GDP growth rate of the Arab countries, thus demonstrating the considerable contribution of the Arab banking industry in the economy.
Moreover, due to the increasing geopolitical risks associated with some Arab countries, our banks face more challenges and put more emphasis on compliance issues related to due diligence practices, risk management and other AML/CFT and KYC monitoring requirements. To efficiently perform this function, regulations also call for adequate staffing levels in the compliance divisions of banks, and the adoption of world-class AML/CFT and compliance software, in view of countering money laundering and illicit financing activities, and making regulatory conformity a core part of their business.
Ladies and Gentlemen,
Despite their adoption of the international best practices, some of our Arab banks began to encounter difficulties in conducting correspondent banking relationships with the U.S. banks, and face a gradual decline in transactions, and sometimes even the termination of correspondent relationships, at times due to the complexity of compliance procedures and their assumed high cost. Moreover, some global banks are tightening correspondent banking relations, as a result of the rising compliance concerns, and that of course, threatens the ability of small banks to provide trade finance services, thus putting an end to their business activities.
This constitutes a key issue that stops institutions from providing essential services to their markets and economies. As previously mentioned, the Arab region is currently destabilized, and is undermined by turbulences that are contaminating the rest of the world. Our banks are playing a constructive role in safeguarding our partnerships with the rest of the world, and our correspondent banks are our counterparts in this mission. We are therefore invited to continue to build on our partnerships, to ensure economic growth and prosperity, as a means of fighting poverty and unrest in the region.
Ladies and Gentlemen,
We have gathered today to continue setting initiatives that help combat our common global threat, which is Money Laundering and Terrorist Financing. Throughout the US MENA PSD gatherings since 2006, we remained committed to fighting money laundering and terrorist financing operations, and mitigating risks on correspondent banking businesses.
The sound implementation of regulatory frameworks requires a mutual and long-lasting private-to-public sector dialogue. An open dialogue and information exchange among financial institutions themselves is also crucial, and this is the main objective of our conference today. This conference is meant to be a platform to share experiences and introduce valid solutions to the challenges we all face.
On a final note, I hope that our discussions over the coming two days will generate fruitful and valuable proposals and recommendations, to strengthen the US MENA Dialogue. In the inter-connected world we live in, that we are entrusted to hand over to future generations, we consider that it is our duty and interest to work in partnerships and set a shared vision to protect our economies, institutions and resources, and make sure that the industry as a whole gets correspondent banking going in the good direction.
Thank you for your attentive listening.
