Working with our Pacific partners - a focus on remittances
Remittances (i.e. the sending of money in payment or gift) are a key source of foreign exchange for many Pacific Island countries, and are crucial to the income for many families in these communities. Remittance transactions in the Pacific are expensive due to structural reasons such as the small size, remoteness, and limited infrastructure of the region.
International regulations and associated de-risking (how banks remove service to a category of customer), along with the impacts of COVID-19, are compounding this problem as Pacific-based banks struggle to access global financial services that enable money transfers to and within the Pacific.
In 2019, we established the Pacific Remittance Project (PRP) with support from the Ministry of Foreign Affairs and Trade (MFAT) to address challenges facing remittance services domestically and in the Pacific region. The project is working to enhance access to, and reduce costs of, remittance to and from the Pacific, increasing access to banking facilities and improving regulatory compliance.
A key focus has been a collective effort with South Pacific Central Bank Governors, the International Monetary Fund and other partner agencies to develop a regional ‘Know Your Customer’ (KYC) facility1. The first phase of this work was successfully completed and approval for the second phase was agreed at the South Pacific Governors Forum held on 17-18 November 2020.
At this forum the Governors stated that access to cost effective remittances remains a high priority for the region and agreed to continue the development of the KYC facility. This will include working with commercial banks, remitters, and other key stakeholders in the remittance sector. If successful, this work will also help drive financial inclusion in the region.
During the next 12 months we will work with banks and remittance service providers in the Pacific region to help the remittance sector enhance its compliance with regulatory and legal obligations. This includes exploring potential policy, legislative and regulatory changes to help stem de-risking, and providing coordination and subject matter expertise around digital identity verification and payment systems. In parallel we continue to work with both domestic stakeholders and regional and international agencies to develop pan- regional guidance.
Our other work in the Pacific
The Bank also provides subject matter expertise to international forums and initiatives with the Financial Action Task Force, Asia Pacific Group on Money Laundering, International Monetary Fund, World Bank, United Nations and Asian Development Bank, to support and enhance regulatory standards globally.
Aside from Pacific remittances, there are a number of other cross-cutting themes across all parts of our work. They simultaneously present challenges and opportunities for us in achieving our mandate. We take an integrated approach to dealing with these and we are able to adjust our focus to emerging short-term themes. This approach allows us to explore a range of tools and engage with a number of different stakeholders while considering our actions. Over the next 12 months, our focus will be on climate change, technology, and FinTech.
More information and related resources:
- Call to Action: Remittances in Crisis: How to Keep them Flowing
- SendMoneyPacific.org – a Government-funded website with the latest rates and information on international money transfers to the Pacific
- 34th South Pacific Central Bank Governors' Meeting, November 2019
- The FinTech Opportunity in Personal Finance (A speech delivered at the Singapore FinTech Festival by Assistant Governor Simone Robbers in November 2019)
- Pacific central bankers prioritise capital flows and climate change, April 2019
- Joint statement from the South Pacific Governors' Meeting, November 2018
1 Know Your Customer (KYC) refers to the process of obtaining and verifying the identity of customers, before and during the time that they have a business relationship with a reporting entity. The term ‘KYC’ also refers to practices which assess and monitor customer risk.