Correspondent Banking
is an essential component of the global payment system, especially for cross-border transactions. an arrangement under which one bank holds deposits (correspondent) owned by other banks (respondent) and provides payment and other services to those respondent banks.
| Term | Definition |
|---|---|
Correspondent Banking | is an essential component of the global payment system, especially for cross-border transactions. an arrangement under which one bank holds deposits (correspondent) owned by other banks (respondent) and provides payment and other services to those respondent banks. |
ECC Governers
| have mandated the CPMI to produce a report on this issue to ensure an efficient provision of cross-border payment services globally |
Beneficiary | the natural or legal person or legal arrangement who is identified by the originator as the receiver of the requested wire transfer |
Beneficiary financial institution | the financial institution which revives the wire transfer from ordering financial institution directly or through an intermediary financial institution and makes the funds available to the beneficiary-bank |
BIC | Business identifier code, for financial and non financial institutions, for which such an international identifier is required to facilitate automated processing of information for financial services |
Cover Payment | refers to a wire transfer that combines a payment messages sent directly by the ordering financial institution to the beneficiary financial institution with the routing of the funding instruction (the cover) from the ordering financial institution to the beneficiary financial institution through one or more intermediary financial institutions |
What is customer due diligence? | The process of identifying the customer and verifying that customer's identity using reliable, independent source documents, data, or information. |
What is involved in identifying the beneficial owner during customer due diligence? | Taking reasonable measures to verify the identity of the beneficial owner to ensure the financial institution knows who the beneficial owner is. |
What information should be obtained regarding the business relationship in customer due diligence? | Understanding the purpose and intended nature of the business relationships. |
What is ongoing due diligence in the context of customer due diligence? | Conducting ongoing scrutiny of transactions throughout the course of the business relationship to ensure consistency with the institution's knowledge of the customer, their business, and risk profile. |
What may be necessary to verify during ongoing due diligence? | The source of funds transfer. |
Intermediary financial institution | refers to a financial institution in a serial or cover payment chain that receives and transmits a wire transfer on the behalf of the ordering financial institution and the beneficiary financial institution or another intermediary financial institution |
Legal Entity Identifier (LEI) | a 20 digit, alphanumeric code designed to uniquely identify legally distinct entities that engage in financial transactions |
MT 103 | The MT 103 allows the exchange of single customer credit transfers. |
MT 103 STP | general use message, user group is necessary to send and receive this messages |
MT 202 | general financial institution transfer |
MT 202 COV | the message is sent by or on behalf of the ordering institution directly, or through correspondents, to the financial institution of the beneficiary institution. |
Ordering financial institution | refers to the financial institution which initiates the wire transfer and transfers the funds upon receiving the request for a wire transfer on behalf of the originator |
Originator | refers to the account holder who allows the wire transfer from that account or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer |
Serial payment | refers to a direct sequential chain of payment where the wire transfer and accompanying payment message travel together from the ordering financial institution to the beneficiary financial institution directly or through one or more intermediary financial institutions. |
Upstream bank | a bank that provides correspondent banking services to another bank. |
Wire transfer | refers to any transaction carried out on behalf of an originator through a financial institution by electronic means with a view to making an amount of funds available to a beneficiary person at a beneficiary financial institution, irrespective of whether the originator and the beneficiary are the same person
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Nostro | Our money with you |
Vostro | Your money with us |