All the proposals, including reducing SAR reporting policies, delegating due diligence to some international body, and pooling compliance resources, ignore the obvious, and only effective, solution: create an effective Know Your Customer's Customer, or KYCC, program, and implement it, without exception. Anything else misses the mark; here's why.
If a financial institution is located in a region where money laundering has historically existed, at a high level, where corruption interferes with the rule of law or where banking best practices do not measure up to North American standards, then the only way it can be now deemed acceptable for correspondent purposes is to have a KYCC program that gives the US bank a window into the foreign bank's customers, has automatic reporting on change of circumstances, and on suspicious transactions, and is assessing the risk levels of that bank's clients, on an ongoing basis. Anything less is simply not KYCC; It is the only risk reduction solution that works.
The challenges facing foreign banks today, who must be able to access the American financial structure, or lose their clients, can be resolved favorably, but only if they allow the respondent banks in New York to have a clear view of their clients and their business, on a real-time basis. Today, a bank can re-risk its client base, to survive, but only through KYCC.