White Papers

Purpose

WIFPR commissions white papers from leading and emerging scholars from a variety of disciplines to create new work accessible to interdisciplinary audiences with relevance to financial policy and regulation.

2022

Christina Parajon Skinner – Confronting the Challenge of Cross-Border Payments: A US Strategy for Central Clearing KYC

For the past two years, the international community of financial regulators has been intently focused on improving the efficiency of cross-border payments.  To date, this work has taken a wide lens in scoping the problem.  This white paper focuses on what the U.S. could contribute to the cross-border payments initiative.  It argues that the bulk of inefficiency in the current legacy system—corresponding banking—derives from frictions associated with anti-money laundering law and regulation.  To streamline the process of conducting customer due diligence, specifically, the paper proposes moving toward a system of centralized verification.  In particular, the paper sketches an idea for a new kind of payments market infrastructure—a centralized verifying party—that would act as a trusted, third-party intermediary verifying transacting parties within correspondent networks.