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Questions and Answers
Correspondent banking refers to an agreement between two financial institutions from the same country.
False
The Wolfsberg Group is a partnership between the twelve largest banks in the world.
True
The Wolfsberg Group's framework helps financial institutions comply with anti-money laundering and counter-terrorism financing laws and regulations.
True
Correspondent banking services include making payments, collecting documents, managing accounts, and establishing physical branches in other countries.
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The Financial Action Task Force (FATF) defines correspondent banking as the provision of banking services by one bank to another.
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Correspondent banking is not essential for international trade and financial transactions.
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Correspondent banks facilitate international trade transactions by directly transferring money between companies in different countries.
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Currency management, including currency conversions and maintaining nostro/vostro accounts, is a core aspect of correspondent banking.
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A nostro account is an account that a bank holds with a foreign bank in the currency of that foreign country.
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Smaller banks typically have direct access to global financial markets without relying on large international banks with correspondent relationships.
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Correspondent banks are subject to strict regulation, particularly regarding Financial Economic Crime, due to the involvement of multiple jurisdictions in international transactions.
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The phenomenon of 'de-risking' refers to banks increasing their correspondent banking services to mitigate regulatory pressure and compliance costs.
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