Samoa’s digital Know-Your-Customers (K.Y.C.) utility has received positive feedback from the Annual Meeting for the International Monetary Fund (I.M.F.) and World Bank Group, held in Washington D.C.

A Know Your Customer (K.Y.C.) utility is a central repository that stores the data and documents required to support a financial institution's K.Y.C. procedures.

According to a press statement, senior officials from the US Treasury and Federal Reserve Bank of New York provided positive feedback to Samoa’s initiatives presented by Governor of the Central Bank of Samoa, Maiava Atalina Ainuu-Enari.

The pilot project in Samoa has been developed by the Central Bank, the Asian Development Bank (A.D.B.) and the Office of the Electoral Commission.

C.B.S. is attempting to address pressures facing its remittance sector such as the closure of Samoa's correspondent banks in New Zealand and Australia, thanks to increased de-risking.

De- risking refers to the practice of financial institutions exiting relationships with, and closing the accounts of clients perceived to be “high risk.”

This has also affected locally-owned commercial banks. 

According to World Bank 2015 survey, smaller countries with limited financial markets are particularly vulnerable to de-risking practices, and they are seeing evidence of this, notably in the Caribbean region.

“These challenges stem from various factors including concerns by international banks of the perceived lack of compliance by these financial institutions of anti-money laundering and countering terrorism financing requirements in the flow of remittance and capital funds between countries,” it reads.

Remittance is Samoa’s largest form of foreign exchange earner with the 2017/18 financial year recording about $503.73 million tala in earnings.

According to figures released by the Central Bank of Samoa, this is an increase of $98.56m tala compared to the 2016/17 financial year, which was about $405.17m tala.

“Recognising the importance of remittances and correspondent banking relations to our small island economy, Samoa has been highly vocal in driving actions and discussions in international and regional forums to ensure our financial institutions are able to remain in business and provide its services for our people,” the statement reads.

“One of the measures identified to assist with these developmental challenges is the establishment of a Know-Your-Customers (KYC) database utility.”

Following the pilot programme, Samoa’s digital KYC utility will be established with the collaboration of the licensed money transfer operators, financial institutions and regulators in Australia and New Zealand.

It is the Central Bank’s vision that Samoa’s digital KYC utility and other commenced projects will support the international banking community with confidence of Samoa’s Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) frameworks, as well as their level of compliance by its licensed financial institutions.

The IMF’s new Managing Director, Madam Kristalina Georgieva, in her opening remarks at this special meeting recognised the importance of establishing a KYC utility as it “can increase the confidence and allow for correspondent banking to serve the citizens in the Pacific better”.