Blame Game: Illicit Finance, De-Risking, and the Politics of Private Financial Infrastructure

In the early 2010s, banks in the Global North began ending or denying correspondent banking relationships with banks in the Global South, a trend known as “de-risking.” Banks culling these relationships blamed overzealous anti-money laundering and counter-financing of terrorism (AML/CFT) regulation in the Global North and insufficient AML/CFT systems in the Global South. De-risking resulted in some developing countries and territories seeing their access to the global financial infrastructure severely restricted, slowing the movement of money and raising costs, including for remittances. This is an undesirable outcome for the targeted jurisdictions, but also for policymakers in the Global North who, for a variety of reasons, want North–South banking relationships to continue. Despite patchy evidence that de-banking was linked to AML, the banking industry leveraged the threat of de-risking and the claim of its tie to AML in order to successfully push back against AML regulation, a first for the AML regime. The case shows the infrastructural power of banks in global financial governance and highlights how state power can be challenged where financial flows are concerned. Local reactions to the episode provide hints about strategies that might loosen the colonial ties that still bind the global financial infrastructure together.