Banking partnerships are essential for all Financial Services companies. It is true that more and more, some NBFIs can exist without a banking partner using other NBFI as partners, but existing without a bank account, or with limited & fragile banking partnerships, it is a very complex and difficult task. The derisking epidemic has hit NBFIs in most markets in the world, either as a direct effect of bank account closures or the effect of local banks losing correspondent bank accounts in the major markets or being forced by major banks to dump NBFIs from their client roster in order to continue providing international services to the local bank.
We at Mohr World have been able to work with banking institutions that have teamed up with us to help them in procuring clients and establishing long-lasting banking partnerships where both financial institutions understand each other and work together in a cost-sharing compliance structure that works well for both institutions.
At Mohr World, we work with banks in the US & Europe that want to provide services to other banks, financial institutions, money transfer companies, MSBs and/or fintechs, by actively advising them in successfully approaching the Bank that can become a partner. Banks save precious time & resources as we review the potential partner institution, we review the customer base, the products & services, transaction volumes, regional specificities, compliance & policies, and make sure there is a good match before the partnership is established. The guarantee that Mohr World provides is that if the mission is not successful, there is no expense for the institution seeking a partnership.
The idea is not just to open a functional bank account but establishing a Banking Partnership where both sides understand the services each other provides, the costs involved, the risk management policies they have and are able to develop trust, based on good and active communication channels thereby eliminating surprises and misunderstandings.
Our Corporate Partners work together to provide the best advice and guidance to institutions in either side or both sides of the Banking Partnership, leveraging their expertise in legal counseling, compliance management and the business understanding of the products & services, knowledge needed to ensure a lasting and fruitful relationship between parties.
THE DERISKING EPIDEMIC
Derisking refers to bank closing the accounts of clients they have considered “high risk” such as NBFIs (money service businesses, money transmitters, foreign exchange firms, fintechs, cryptocurrency firms) but also foreign embassies, nonprofit organizations (charities) and correspondent banks. Although compliance concerns have been raised, the reality is that these businesses are believed to provide the bank low profits, increased AML/CFT scrutiny costs, reputational risk, and raises the possibility of fines from regulators if those accounts are not well monitored. Anti-competitive behavior by banks has also been raised in the legal system when banks have been challenged in the courts.