Who is correspondent bank

In this case, the issue had not been called into question as part of previous risk assessments, despite the relationship manager raising it previously as a point of concern in relation to the relationship. As a final example, when upgrading the risk assessment standards within a particular bank, it had been totally overlooked that correspondent banking relationships require additional considerations, compared to, for example, a typical corporate entity.

Whilst the KYC information would have been on file to the correct standard, actual assessment of risks would have been totally missed. Although I spotted this quite easily with a fix put in place accordingly, how it had been overlooked by the multitude of individuals that would have been involved in the work undertaken to improve the banks controls revealed the under-appreciation of the importance of the risks.

Correspondent banking risk management is not a new challenge or requirement; correspondent banks should have a sound understanding of who they are dealing with.

They may not have access to the details of every customer of the respondent bank, but they should take steps to best understand the relationship they are entering or continuing. It could be the difference between facilitating global finance and facilitating financial crime. Dev Odedra is an independent anti-money laundering and financial crime expert. Financial service providers, such as Dow Jones, can play an integral role in helping correspondent banks conduct research on respondent banks.

Risk Glossary What is Correspondent Banking? What is a correspondent bank? More From Bankrate Are banks open today? Federal bank holidays in Find out when banks have the option to close. How much are wire transfer fees?

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Best bank account bonuses for November Walk away with stacks of cash just for opening a checking or savings account. List of failed banks: Bank failures happen from time to time. While correspondent banks normally handle transactions involving multiple currencies , an intermediary bank completes transactions involving a single currency.

They are especially key for domestic banks that may be too small in size to handle these types of transactions. Corporate Finance. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.

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What Is a Correspondent Bank? Key Takeaways A correspondent bank is an authorized financial institution that provides services on behalf of another financial institution. Correspondent bank services may include funds transfer, settlement, check clearing, and wire transfers.