The Governors of central banks across the South Pacific have agreed developing new ways to lower the cost of sending money overseas is a high priority for economies across the Pacific. 

The aim has been communicated by members of the South Pacific Central Bank Governors Forum following a meeting late last year. 

According to a media release following the meeting, the participating national banks are also engaged in a collective effort to improve international transparency of financial transactions by developing a ‘Know Your Customer’ (K.Y.C.) standard in the region to prevent money-laundering.

Know Your Customer (K.Y.C.) refers to the process of obtaining and verifying the identity of customers, before they develop a relationship with a bank, allowing financial institutions to assess and monitor the risk of dealing with law-breaking customers. 

The central banks, with support from the International Monetary Fund and other multilateral agencies, have successfully completed initial work on a K.Y.C. standard for the South Pacific.

The Governor of the Reserve Bank of Vanuatu and host of the Forum, Simeon Malachi Athy, said that the intention of the standard is to improve due diligence processes to prevent money laundering, terrorism financing, reducing the cost of remittances, and lowering the cost to banks of complying with the law. 

“Remittances are a key source of income for Pacific Island countries, and are crucial to the income for many families in these communities,” he added.

He also explained that the catastrophic impact of COVID-19 on the South Pacific economies has heightened the need to accelerate progress on lowering the costs of sending money. 

“The implications of high remittance costs and de-banking are significant to the future economic wellbeing of the South Pacific Region - and globally," he said. 

The Governors’ have agreed to continue their work to develop the regional K.Y.C. standard. 

This will include working with commercial banks, money transfer operators, and other key stakeholders in the remittance sector. If successful, this work will also help drive financial inclusion in the region.

The Forum is composed of the Reserve Bank of Australia, Reserve Bank of Fiji, Reserve Bank of New Zealand, Bank of Papua New Guinea, Central Bank of Samoa, Central Bank of Solomon Islands, Banco Central de Timor-Leste, National Reserve Bank of Tonga, and the Reserve Bank of Vanuatu.

Others involved in the work include: the International Monetary Fund, World Bank, The Asian Development Bank, the U.N.’s Capital Development Fund, Australian Government Department of Foreign Affairs and Trade; the New Zealand Ministry of Foreign Affairs and Trade; the New Zealand Department of Internal Affairs; and Pacific Island country Government agencies.