Financial Security Under Threat: Emerging Risks in Marshall Islands
Threats to Financial Security in the Republic of the Marshall Islands
September 10, 2018 - Majuro, Marshall Islands - The financial security of the Republic of the Marshall Islands (RMI) is facing emerging threats, with correspondent banking relationships (CBRs) pressures looming large over the country’s two banks.
The Risks of Losing Correspondent Banking Relationships
The Bank of the Marshall Islands and Trust Company of the Marshall Islands currently have access to the US financial system, which has been a crucial lifeline for RMI. However, weak implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) framework by local authorities is contributing to growing concerns among international banks.
The Consequences of Losing Access to the US Financial System
A recent study reveals that if the Bank of the Marshall Islands were to lose its correspondent banking relationship with First Hawaiian Bank, it would have severe economic repercussions for RMI. In a country where financial services are heavily reliant on a single bank, losing this critical lifeline could cripple the economy.
Mitigating Risks and Ensuring Financial Security
To mitigate these risks, local authorities are strengthening the effectiveness of the AML/CFT framework. However, experts warn that more needs to be done to lower the risk of losing the last US dollar CBR.
Steps to Address Emerging Threats
- Complete a national risk assessment
- Develop an action plan to address identified risks and prevent a financial crisis
- Strengthen the AML/CFT framework
- Enhance international cooperation and coordination
Prioritizing Financial Security and Stability
The situation highlights the need for RMI authorities to prioritize financial security and stability. With the global economy facing unprecedented challenges, it’s more important than ever for small island nations like RMI to ensure that their financial systems are robust enough to withstand external pressures.
International Support and Guidance
As RMI works to address these emerging threats, the international community should provide support and guidance to help the country strengthen its financial resilience. The stability of RMI’s economy is not just a local concern but also has implications for regional and global economic security.