Correspondent account:
from license to clearing

01

The account is designed for a specific payment function

Correspondent institution provides services to respondent institution for payments from its clients or its own settlements. Before selecting a bank, currencies, products, customer segments, geography, settlement, liquidity and expected message flow are determined.

Nostro / vostro

Currency, destination, ownership of funds and reconciliation

Clearing

Domestic, cross-border, card, trade or treasury payments

RMA

The right to exchange SWIFT messages is not the same as the right to conduct any transactions

Nested relationship

Access of respondent clients and other financial institutions is disclosed and controlled

Not correspondent

An ordinary corporate account of a financial company should not hide client funds

02

Who can be respondent

The candidate must be a truly licensed and supervised financial institution with a physical presence and a functioning control system. The license type must allow services that require correspondent access.

Bank

Full or limited license and clear prudential supervision

EMI / PSP

Permitted payment services, safeguarding and availability of correspondent product

Other FI

Function, license and regulatory classification are verified separately

Shell bank

Relationships are prohibited; also checks to see if respondent grants shell bank access

03

Institutional profile

The correspondent bank evaluates the country, regulator, ownership and management, financial stability, products, clients, geography, AML history and the economic necessity of the relationship.

04

Institutional KYC dossier

Corporate

Charter, register, license, group chart, UBO and management

Regulatory

License scope, regulator contacts, prudential returns and recent inspection findings

AML

Enterprise-wide risk assessment, policies, CDD/EDD, sanctions, TM and STR process

Audit

Audited financials, internal audit and independent AML testing

Payments

Currencies, corridors, use cases, volumes, customer types, SWIFT BIC and sample messages

Questionnaires

Wolfsberg CBDDQ or bank form - in full and in accordance with evidence

05

AML/CFT/CPF is the central part of the solution

Cross-border correspondent relationships are considered a higher risk and require an EDD. The analysis covers jurisdictions, sanctions, ownership, customer base, products, nested access and respondent control quality.

CDD / EDD

Identification, beneficiaries, purpose, reputation and regulator quality

Sanctions / TFS

Screening clients and payments, ownership/control and escalation

Transaction monitoring

Scenarios for corridors, types of clients, volumes and behavior

Nested access

Identification and control of downstream institutions and their clients

Governance

Senior management approval, risk appetite and documented solution

06

Payment and technical architecture

Legal approval must coincide with real operational readiness: SWIFT connectivity, ISO 20022 data, sanctions screening, cut-off, reconciliation, liquidity and payment investigation.

Messages

Acceptable MT/MX, RMA scope and mandatory data fields

Settlement

Prefunding, intraday liquidity, fees, cut-off and value dates

Operations

Maker-checker, repair, returns, investigations and exception handling

Controls

Real-time screening, post-event monitoring and case management

Resilience

BCP/DR, cybersecurity, incident notification and vendor controls

07

Correspondence project procedure

1. 01
   Target model

   Currencies, corridors, products, clients, volumes and clearing needs.

2. 02
   Gap assessment

   License, AML, governance, audit, SWIFT and operations.

3. 03
   Bank mapping

   Suitable UAE correspondents and their risk appetite.

4. 04
   Due diligence

   Questionnaire, evidence, interviews, approvals and remediation.

5. 05
   Implementation

   Agreements, RMA, testing, limits, funding and controlled go-live.

08

Opening is the beginning, not the end of the test

The Correspondent institution updates the risk assessment and respondent profile, monitors transactions and documents actions. Significant changes in ownership, license, clients, corridors or volumes will be communicated in advance.

Periodic review

Risk-based KYC refresh and relationship re-evaluation

Payments

Deviations from the stated profile, new countries and unusual patterns

Requests

Quick response to RFI with primary documents and customer context

Audit

Independent testing of control and remediation findings

Exit

If the risk is uncontrollable, restrictions, suspension or termination are possible

09

Critical red flags

10

Readiness pack before contacting

1. 01

   The license and legal opinion cover the proposed services.

2. 02

   Ownership, governance and physical presence are confirmed.

3. 03

   AML/CFT/CPF framework works and is independently tested.

4. 04

   Payment corridors, clients, volumes and nested access are transparent.

5. 05

   SWIFT, ISO 20022, sanctions, liquidity and operations are ready for testing.