The Banking Executive Magazine - December 2025 Issue

PSD 2025 correspondents to pull back even more. In summary, Session II underscored that safeguarding correspondent ac- cess requires a multifaceted effort. Transparency, improved compliance controls, and continuous communi- cation are the immediate tools for banks to maintain and regain corre- spondent relationships. Concur- rently, regulators must reinforce the domestic banking environment – through stronger governance, en- forcement, and oversight of all finan- cial intermediaries – so that international partners gain confi- dence in the overall system. By tack- ling both the banks’ internal compliance and the external ecosys- tem risks, the aim is to reduce indis- criminate de-risking and preserve the vital financial links that support trade, remittances, and investment in the MENA region. SESSION III: GOVERNING THE DIGITAL FINANCIAL ECOSYSTEM AND UTILIZING AI The third and final session turned to the frontier of financial innovation – digital finance – and its implications for compliance and regulatory gov- ernance. As digital transformation accelerates, banks and regulators face the challenge of managing new technologies and services (such as cryptocurrencies, fintech payment platforms, and artificial intelligence tools) that transcend borders. Moder- ated by Eng. Suleiman Baradah, Managing Partner at Xeevolve, Qatar, the panel featured a distin- guished lineup of experts from the technology, legal, and compliance sectors. The speakers included Mr. Bhavin Shah, Managing Director, Secretariat, UAE; Mr. Stuart Jones, Jr., CEO of Sigma360, USA; Mrs. Gretel Echarte Morales, Counsel at Mayer Brown LLP, USA; and Mr. Sterling Daines, Managing Director of Risk & Compliance at BNY Mellon. Their combined expertise provided deep insights into the opportunities pre- sented by digital finance and the crit- ical safeguards required to ensure innovation advances in a secure, transparent, and compliant manner. A central topic was the array of emerging digital finance tools and the importance of addressing their cross-border dimensions. Unlike traditional banking products, digital financial services (such as crypto-as- sets or online remittances) often op- erate on global platforms and can be accessed from almost anywhere. This ubiquity can exacerbate regula- tory arbitrage and pose challenges for any single jurisdiction’s controls. The panel discussed efforts to coor- dinate internationally on standards for cryptocurrencies and virtual asset service providers (VASPs) – building on guidance from bodies like the FATF – to ensure that risks like money laundering, terrorist financ- ing, and fraud are mitigated even as innovation flourishes. One focus was on supervising digital finance: regu- lators need new technical capacities and legal tools to oversee fintech firms, cryptocurrency exchanges, and other non-bank entities that now facilitate significant financial flows. Panelists highlighted risks such as il- licit crypto-asset channels (e.g. mis- use of exchanges, mixers, or privacy coins by bad actors) and the vulner- abilities of decentralized finance, all of which require vigilant monitoring and cross-border information-shar- ing. From the industry side, speakers stressed the responsibility of institu- tions engaged in digital finance to implement robust institutional risk controls for digital asset transfers. Banks and fintech companies deal- ing with crypto or other digital prod- ucts must strengthen their compliance programs – for example, by conducting thorough customer due diligence on VASP clients, mon- itoring transactions on blockchains for red flags, and ensuring they can mitigate technical risks like cyber threats or protocol hacks. Strengthen- ing VASP compliance is not just about following regulations but about protecting the integrity of the ISSUE 204 DECEMBER 2025 the BANKING EXECUTIVE 37