Due Diligence in Correspondent Banking: AML Compliance

Financial institutions are only required to conduct Know Your Customer investigations on individual customers and companies.

The FATF's 40 recommendations do not specify the requirements for financial institutions regarding correspondence banking.

Understanding the business profile of the responding institution does not require considering relevant risk factors such as the products and services offered.

The FATF guide to correspondence banking was published in October 2015.

Correspondence banks are not required to understand the target markets and customer segments served by their responding institutions.

Correspondent banks do not need to continuously monitor transactions in their correspondent accounts to check for unusual activities.

The CBDDQ is used to assess the risk of a correspondent bank doing business with a shell bank.

Correspondent banks can only monitor transactions in real-time if the partner bank has a high risk profile.

The Correspondent Banking Due Diligence Questionnaire is a mandatory requirement for all banks to establish correspondent relationships.

The CBDDQ asks questions about the detailed company information of the correspondent bank, including its full legal name and address.

The bank's risk assessment processes are designed to identify and manage low risks, including non-politically exposed persons.

The Training and Awareness component focuses on the bank's compliance with relevant anti-money laundering and terrorist financing regulations.

The Independent Audits and Reviews component is responsible for periodically reviewing the bank's risk assessments.

The Continuous Monitoring and Update component is responsible for ensuring the bank stays abreast of changes in relevant laws and regulations.

The Responsibility and Contact Information component provides details on the bank's customer acceptance policies.