Correspondent account:
access to RMB and CIPS

01

Three models of access to the Chinese payment circuit

The choice depends on the license, the volume of RMB payments, customer geography, technical infrastructure and willingness to bear the direct responsibilities of a system participant.

02

First we define the product, then the bank

RMB nostro / interbank account

Cross-border and offshore RMB payments for foreign bank clients

Commercial payments

Trade in goods, services, investments and other permissible transactions

FX conversion

Buying and selling RMB based on acceptable underlying business

Liquidity

Funding, cut-off, intraday management and acceptable credit lines

Trade finance

LC, guarantees, collections and documentary operations with separate approval

Other currencies

USD, EUR and other currencies depend on the product, license and appetite of a particular bank

03

Qualification of a foreign bank

The Chinese correspondent verifies that the applicant is legally established, has a valid banking or other relevant license, is under effective supervision, and is authorized to carry out the stated cross-border payments.

Legal status

Legal Entity or Eligible Regulated Subdivision

License

Valid banking and payment authorities in the country of establishment

Regulator

Supervisory authority, inspection results and license status

Capital

Prudential indicators, reporting and ability to manage liquidity

Reputation

Enforcement, significant fines, litigation and adverse media

Business case

Real clients, RMB flows, countries, volume and growth forecast

04

The correspondent must be suitable for the payment route

The size of a Chinese bank alone does not guarantee a suitable product. Direct participation in CIPS, geographic coverage, industry risk appetite, currencies, trade finance, technology, team language, cut-off and willingness to serve the applicant’s country are compared.

CIPS role

Direct participant, indirect routing and clearing services available

Risk appetite

Country, license type, customer segments and industries

Network

Branches, correspondent network and coverage of Chinese counterparties

Operations

Cut-off, repair process, investigations, returns and reconciliation

Commercials

Opening, maintenance, payment, FX, investigation and minimum balance fees

05

Institutional due diligence goes deeper than ordinary KYC

Not only the bank’s corporate structure is checked, but also its customer base, AML/CFT governance, transaction monitoring, sanctions control, correspondent relationships, nested activity and the ability to provide information on underlying customers.

06

AML/CFT and sanctions determine the viability of the project

AML framework

Risk assessment, CDD/EDD, UBO, PEP and source-of-funds controls

Monitoring

Scenarios, thresholds, alerts, investigations and SAR/STR process

Sanctions

Applicable lists, screening, ownership rules and escalation

Correspondent risk

Nested relationships, payable-through access and downstream institutions

Data response

Time and quality of response to RFI for a client and a specific payment

Audit

Independent testing, remediation and confirmation of effectiveness

07

CIPS indirect participation is not just another account

The candidate selects a CIPS direct participant, is verified and instructed to submit registration. According to official requirements, a legal institution, RMB settlement capability, working business, compliance, risk and system management, as well as a good reputation are required. After registration, a CIPS code is created.

Indirect participant

Works through a direct participant and does not open its own current account with CIPS

CIPS code

Uniquely identifies the participant and helps determine the payment route

Direct participant review

The correspondent checks the application and is responsible for relationship management

CIPS registration

The system accepts, requests additions or refuses registration

Direct participation

Separate high threshold for business volume, technology, risk and compliance

08

Technical readiness is checked before launch

The operating model includes messaging, BIC and CIPS identifiers, RMA if applicable, payment format, testing, reconciliation, liquidity, cut-off, business continuity and cyber controls. The connection format depends on the correspondent’s product and participant status.

Messaging

CIPS/SWIFT connectivity and supported message formats

Static data

BIC, CIPS code, correspondents, accounts and routing instructions

Controls

Maker-checker, entitlements, limits and privileged access

Operations

Repair, reject, return, recall, investigation and statement reconciliation

Resilience

BCP, DR, cyber incident response and backup channels

09

Tariffs are calculated together with liquidity

A cheap payment fee may be insignificant compared to the minimum balance, prefunding, FX spread, investigation fees and the cost of idle liquidity. The commercial offer is modeled on real traffic.

Fixed

Onboarding, account maintenance, connectivity and participation

Transactional

Incoming, outgoing, repair, return, investigation and statements

FX

Spread, value date, limits and available currencies

Liquidity

Prefunding, overdraft prohibition, credit line and intraday needs

Volume

Tier pricing and minimum turnover obligations

10

Process of opening a correspondent account

1. 01
   Qualification

   License, country, product, RMB flows and model eligibility.

2. 02
   Bank mapping

   Shortlist of Chinese direct participants and correspondents on risk appetite.

3. 03
   Pre-application

   Institutional profile, traffic data and preliminary position of the bank.

4. 04
   Due diligence

   Corporate, regulatory, financial, AML, sanctions and technology package.

5. 05
   Agreement

   Account, RMB settlement, CIPS, pricing, data and operational terms.

6. 06
   Testing & launch

   Connectivity, users, routes, liquidity, pilot payments and monitoring.

11

Package of documents of the applicant bank

1. 01

   Certificate of incorporation, charter, banking license and regulator confirmation.

2. 02

   Ownership chart, UBO or public/government ownership evidence and group structure.

3. 03

   Board, management, authorized signatories and account opening resolutions.

4. 04

   Audited financial statements, capital ratios, ratings and regulatory reports.

5. 05

   AML questionnaire, policies, enterprise risk assessment and independent audit.

6. 06

   Sanctions, PEP, transaction monitoring, correspondent banking and RFI procedures.

7. 07

   Customer base, products, countries, RMB volumes and sample payment flows.

8. 08

   Technology, information security, BCP/DR and connectivity description.

12

After opening, ongoing monitoring begins

The correspondent regularly updates KYC and compares real traffic with the declared profile. A change in license, ownership, management, countries, products, enforcement or significant incident is reported without waiting for the next review.

Periodic review

Updating corporate, regulatory, financial and AML information

Transaction review

Volume, countries, clients, assignments and deviations from the profile

RFI

Timely response with underlying documents

Material change

Immediate notification of events affecting risk

Exit planning

Balance, pending payments, data retention and alternative route