This opening section provides an insight into the history of Correspondent Banking, its inherent risks and why there is rigorous regulatory oversight.
- Definition and overview of Correspondent Banking and its importance today
- Risk identification
- What constitutes financial crime, why it is particularly applicable to Correspondent Banking and what should be done to combat it
- Society for World Wide Interbank Financial Telecommunication (SWIFT) payment system
- Consider SEPA and Blockchain payment systems.
This section focuses on key pieces of global regulation which govern financial crime risk management and compliance and draws-out the importance of meeting global and local regulatory requirements.
- The USA Patriot Act; the implications and requirements governing transactions in US Dollars or involving US citizens or entities
- OFAC Sanctions; their purpose and implications
- FATF Recommendation; including Wire Origination Rules and payments transparency
- Wolfsberg Group; industry best practice guidance and recommendations
- Lessons learned through failures to identify financial crime
This section covers the numerous types of client and account involved in Correspondent Banking and the risks which arise with each one.
- 3rd party Correspondent Banks
- Downstream/“Nested” Correspondent Banking
- Anonymous Accounts
- Affiliates and branches
- Shell Banks
- Money Service Bureaus
- Account services
- Making and receiving payments through your Correspondent Banking network
- Identification of the types of risk which arise in the payments process including currency risk
- Trade Finance products:
- Documentary Collections
- Letters of Credit
- Foreign exchange
This section looks at the broad concepts of risk management designed to prevent financial crime.
- Risk infrastructure and defining the bank’s appetite for risk within Correspondent Banking
- Three Lines of Defense: concept and purpose
- Compliance risk management: KYC plus global, international and local regulations and industry standards
- Operational risk management: Screening and monitoring, suspicious activity
- Continuous risk management: Ongoing due diligence