Pacific Remittances Project (PRP)
Remittances have historically and continue to be a key source of foreign exchange for many Pacific Island countries. They are crucial income for many families in these communities.
With support from the Ministry of Foreign Affairs and Trade (MFAT), we worked on a project designed to improve access to and reduce the costs of remittances to the South Pacific.
Challenges in the remittance space
Remittance transactions in the Pacific are expensive due to the region’s small size, remoteness and limited infrastructure. Banks in the Pacific struggle to access global financial services that enable money transfers to and within the region.
This problem is being made worse by international regulations and associated de-risking (how banks remove service to a category of customer), along with the impacts of COVID-19.
There were 2 main workstreams for the PRP. Together they sought to:
- increase operational efficiency
- improve the standards and culture of compliance
- reduce cost
- reduce the likelihood of de-risking
- better detect and deter financial crime
- improve financial inclusion.
Workstream 1 looked at ongoing changes to guidance, legislation and policy relating to anti-money laundering and countering the financing of terrorism (AML/CFT) — that are needed to increase compliance culture, upskill remitters, increase banks' comfort with remitters as customers and stem de-risking — to better facilitate the flow of funds to the region.
Workstream 2 was focused on developing a regional ‘Know Your Customer’ (KYC) facility. This refers to the process of obtaining and verifying the identity of customers, before and during the time they have a business relationship with a reporting entity. The term ‘KYC’ also refers to practices which assess and monitor customer risk.
The PRP, which was run in collaboration with the Reserve Bank of Australia, several international agencies and MFAT, formally concluded in July 2022.
A number of achievements were realised during the PRP, including:
- Contributing to 2 Financial Action Task Force projects exploring the unintended consequences of AML standards (including de-risking and financial inclusion) and cross-border payments.
- Developing, through engagement with the Ministry of Justice and other agencies, recommendations to inform the review of New Zealand’s Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) legislation to better support the flow of remittances to the region. This included recommendations regarding a potential safe harbour ‘code of practice’ for banks and remitters, and for the licensing of remitters.
- Collaborating with the Department of Internal Affairs on the development and publication of a risk assessment of the New Zealand-to-Pacific Islands money remittance sub-sector.
- Collaborating with the group of central banks across the Pacific Region. We also liaised with, and provided subject-matter expertise to, a number of international agencies including the United States Department of the Treasury, the International Monetary Fund, the World Bank, the Asia Pacific Group, the Asian Development Bank and the Financial Action Task Force.
- Leading the development of a business case and recommendations regarding the potential development of a regional electronic KYC (eKYC) facility. Governors of 9 central banks agreed to continue developing their eKYC capability on a country-by-country basis rather than a regional solution, however the foundations have now been laid for South Pacific island nations to take this work forward.
Our other work in the Pacific
We engage with stakeholders to help increase coordination, build capacity and share information.
For example, we provide training with the Asia Pacific Group to build AML/CFT capacity across the region including the Pacific Islands. We also engage actively in the Pacific/CFT Supervisors’ Forum and take the lead in supporting this forum.
Business and Economic Research Limited (BERL) Cook Island Banking (PDF 1.23 MB) - Special report, 13 December 2022
Central Banks committed to economic prosperity and wellbeing in South Pacific – News release following South Pacific Central Bank Governors, 29 June 2022
Correspondent banking in the Pacific (PDF 496 KB) – Special report, 1 July 2021
Tide going out on Pacific banking services – News release, 1 July 2021
Keeping the bank door open for Pacific peoples – Opinion piece by Reserve Bank Governor, 27 April 2021
Reserve Bank supports global call to action on remittances – News release, 19 June 2020
SendMoneyPacific.org – a government-funded website with the latest information on international money transfers to the Pacific
34th South Pacific Central Bank Governors' Meeting – News release, November 2019
The FinTech Opportunity in Personal Finance – a speech delivered at the Singapore FinTech Festival by Assistant Governor Simone Robbers, November 2019
Pacific central bankers prioritise capital flows and climate change – News release, April 2019
Joint statement from the South Pacific Governors' Meeting – News release, November 2018