Correspondent Bank

Acts as the cross-border clearing hub through which chains of scripted wire transfers hop, often faster than the respondent banks’ monitoring can react.

Intermediary clearing banks are unwittingly exploited when criminals alter or conceal payment details before transactions reach them, preventing automated screening from identifying sanctioned parties. Colluding staff within the originating bank’s infrastructure may mask or remove critical information, enabling cross-border wires to pass undetected.

Provides cross-border services to the respondent bank but often relies too heavily on the respondent’s oversight. This lack of independent verification allows:

• Undetected inflow of potentially illicit proceeds, under the presumption that the respondent has vetted transactions properly.
• Criminals to capitalize on minimal due diligence, embedding tainted funds into global payment systems.

Correspondent banks facilitate international transfers for respondent banks and can be compromised when:

• Criminals route cross-border transactions through correspondents in regions with weaker AML enforcement.
• Limited or inconsistent data requirements across jurisdictions mask ultimate beneficiaries and origins.

Correspondent banks handle cross-border fund transfers for entities in multiple jurisdictions by:

• Providing indirect access to foreign financial systems where AML standards vary.
• Facilitating the international movement of funds that can cloak the origin and destination of illicit proceeds.

Criminal actors rely on these intermediary channels to complicate KYC and regulatory scrutiny.

Correspondent banks facilitate cross-border transactions by:

• Providing intermediary accounts for layering funds through multiple foreign jurisdictions.
• Enabling repetitive offshore loops that obscure transaction histories and the illicit source of funds.

This cross-border usage complicates monitoring efforts by financial institutions, as criminals can exploit multiple respondent relationships for layering.

Correspondent banks unwittingly facilitate multi-jurisdiction layering by:

• Processing cross-border transfers linked to forged or inflated trade transactions.
• Providing intermediary channels that obscure the financial trail, especially when multiple correspondent relationships are used.

• Provide cross-border wire transfer services for other banks, often processing funds through multiple jurisdictions.
• Criminals exploit these relationships to rapidly layer transactions, making end-to-end traceability difficult.
• Financial institutions face challenges in performing effective due diligence when wire transfers hop between numerous correspondent partners.