The Pacific Islands Forum Secretariat (PIFS) last week signed a Memorandum of Understanding (MOU) on correspondent banking relationships with the United States Department of the Treasury (U.S Treasury).

This historic agreement marks a significant milestone in enhancing financial cooperation and collaboration between the PIFS and the U.S Treasury and is a key bridge towards an inaugural Pacific Banking forum planned for mid-2024.

The MOU aims to address the decline of correspondent banking relationships in Pacific Island countries in recent years, which is posing significant stress on economic development in the region.

Speaking at the signing event in the U.S, Pacific Islands Forum Secretary General Henry Puna emphasised the importance of the collaboration.

“This collaborative effort underscores the shared commitment to promoting economic resilience and prosperity in the Pacific region, key priority areas of the 2050 Strategy for the Blue Pacific Continent,” said SG Puna.

The MOU on Correspondent Banking Relationships between PIFS and U.S Treasury comes in the wake of recommendations endorsed by Forum Economic Ministers in 2023. Correspondent Banking challenges and recommendations were noted in the Pacific Islands Forum Diagnostic 2023 Report.

The support provided by U.S Treasury should facilitate discussions between PIF members and U.S correspondent banks including U.S Banking and Financial regulators regarding anti-money laundering and combatting the financing of terrorism (AML/CFT) standards.

The partnership seeks to address challenges in correspondent banking relationships that are vital for cross-border payments that facilitates investments, trade, and remittances.

The signing ceremony was attended by representatives from the U.S Treasury, PIF Secretariat, the Cook Islands and Tonga.