Global banks have retreated from emerging markets, citing regulatory complexity, geopolitical uncertainty, and rising compliance costs. This has left gaps that neither corporates nor local financial institutions can easily fill. In this context, development banks are emerging not merely as lenders or conveners but as neutral risk arbiters capable of underwriting compliance risk and enabling due diligence at scale.

The idea is straightforward but powerful: development banks could subsidise and maintain shared compliance infrastructure to facilitate transactions between markets that currently lack the necessary trust architecture. Imagine a small manufacturer in Tajikistan seeking to export to Morocco. Such a transaction is typically deemed too risky or complex to execute without extensive bilateral frameworks or correspondent banking channels. However, if both parties could access a common risk assessment and compliance platform, one maintained by a development bank: suddenly, the transaction becomes viable.

In conversations with stakeholders across the development finance space, the appetite for such a solution is clear. Yet, until now, no single actor has had both the incentive and the remit to build it. Commercial institutions lack the scale or neutrality to justify such an investment, standard-setting groups have seen their influence decline, and global banks often operate at a level too far removed from operational realities. Regional development banks, by contrast, are close enough to the ground, sufficiently trusted, and increasingly technologically-equipped to bridge the gap. 

Where’s the holdup?

Imagine building the same house using completely different blueprints in every town and city: that’s the obstacle development banks face. Because each country has its own unique set of established rules and regulations, it’s incredibly hard for these institutions to ensure that all their projects, from renewable energy plants to infrastructure improvements, meet the high standards. This inconsistency can lead to costly, unexpected delays and environmental damage. 

The good news is that there’s a way to tackle this challenge head-on. Development banks aren’t powerless in the face of these regulatory hurdles. By taking specific, proactive steps, they can work to ensure that countries adhere to a unified framework, promoting consistency and accountability across all their projects. This approach not only minimises risks but also maximises the positive impact of development initiatives worldwide. 

The importance of standardised frameworks 

The same principle applies to cross-border payments. If you want to drive trade, you need to enable payments. And if you want to enable payments, you have to create a risk infrastructure that’s shared across markets in spite of regulatory divergence.

In the world of cross-border finance, fragmented compliance processes represent one of the most persistent barriers to trade and financial inclusion. Development banks are uniquely positioned to address this challenge by sponsoring shared compliance infrastructure that benefits entire markets, rather than individual institutions.

Imagine a regional development bank’s initiative to improve cross-border payments in sub-Saharan Africa, which encountered significant delays due to inconsistent know-your-customer (KYC) standards and overlapping data privacy regulations, ultimately pushing the rollout back by years and driving up costs significantly. Meanwhile, in Southeast Asia, another bank launched a digital payment corridor, only to find that weak enforcement of anti-money laundering (AML) rules led to compliance breakdowns and a loss of trust among participants. These cases mirror the broader challenges in cross-border payments and highlight the risks of fragmented compliance regimes. 

Currently, every financial institution involved in an international transaction must independently conduct the same foundational compliance checks: verifying identities, screening for sanctions, assessing jurisdictional risk, and evaluating transaction intent. With each additional duplicate, though, costs are inflated, delays are introduced, and conflicting outcomes are produced. 

Were development banks to sponsor shared compliance infrastructure, a common platform where participants can access validated compliance signals before transactions are executed, this landscape could be transformed. Rather than replacing local regulatory obligations, a unified framework provides a clear, consistent set of guidelines that can be applied across diverse projects and locations, reducing administrative overhead and accelerating project timelines; it enhances transparency, which is crucial for maintaining public trust and attracting further investment; and it delivers sustainable, long-term benefits to recipient countries.

Building the foundation: Shared risk infrastructure

Development banks can sponsor and maintain shared compliance infrastructure that serves as a neutral utility for the markets where they operate. This infrastructure would provide standardised access to essential compliance components, including entity verification systems, real-time sanctions screening, jurisdictional risk assessments, and transaction monitoring capabilities.

The infrastructure operates by creating a common layer of validated compliance data that multiple institutions can access through secure application programming interfaces (APIs). When a bank in Morocco wants to process a payment to a manufacturer in Türkiye, both institutions can query the same verified data sources rather than conducting separate, potentially inconsistent assessments. This shared approach dramatically reduces the time and cost associated with cross-border transactions while maintaining robust compliance standards.

Development banks are ideal sponsors for such infrastructure because they possess the necessary neutrality, scale, and mandate to serve multiple markets simultaneously. Unlike commercial institutions that might favour their own clients or competitive positions, development banks can maintain platforms that benefit all participants equally. Their regional focus also ensures the infrastructure is tailored to local market needs while maintaining international standards.

Aligning trade with compliance: Incentives and conditionality

By sponsoring shared compliance infrastructure, development banks can create a compelling case for reform. Smaller banks and payment providers, which often lack the resources to build sophisticated compliance systems, gain access to enterprise-grade risk management tools through the shared platform. This expanded access enables development banks to safely participate in international trade and payments.

The benefits extend beyond individual institutions to entire economic corridors. High-risk trade corridors that currently experience delays, high costs, or outright blocking due to compliance concerns become viable when all participants can access reliable, standardised risk assessments. Trade flows increase as transaction costs decrease and processing times improve.

Development banks can structure these platforms as utilities governed by transparent frameworks that ensure data protection, accountability, and fair access. Rather than creating dependency, the infrastructure builds capacity across the financial sector by providing smaller institutions with tools and knowledge they can use to strengthen their own compliance capabilities over time.

This shared compliance infrastructure approach shifts risk control from a fragmented institutional burden to a common, scalable utility, supporting trade, inclusion, and financial integrity simultaneously.

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This shared compliance infrastructure approach makes risk control less fragmented and institutionally dependent; the framework for making this vision a reality already exists within development banks’ existing operations and mandate.

Development banks already deploy hundreds of billions of dollars annually in financing to developing countries –  the World Bank alone committed $71.7 billion in loans, grants, equity investments, and guarantees in fiscal year 2023. These institutions have demonstrated their ability to drive policy reform through strategic incentives: the OECD has found that countries receiving technical assistance from development agencies are significantly more likely to implement policy reforms. Moreover, 70% of development banks have already integrated environmental, social, and governance (ESG) factors into their investment processes, according to a 2020 UN report, proving their capacity to embed new standards into existing frameworks.

The shared compliance infrastructure represents a natural evolution of this proven approach. Rather than creating entirely new mechanisms, development banks can leverage their existing relationships, technical assistance programs, and conditional lending structures to build and maintain these platforms. When underpinned by reliable data and contextual intelligence, the same conditionality and incentives that have successfully driven ESG adoption can become instruments for compliance standardisation.