Correspondent banking involves one financial institution providing services to another financial institution. This arrangement enables banks to conduct transactions, such as wire transfers and foreign exchange, in jurisdictions where they lack a physical presence. It forms a foundational component of the global financial system, facilitating cross-border payments and trade finance. These relationships are subject to stringent regulatory oversight concerning anti-money laundering and counter-terrorist financing measures.
Context
Correspondent banking faces ongoing scrutiny due to its role in international financial flows and associated compliance costs. The rise of digital currencies and blockchain-based payment systems presents a potential disruption to traditional correspondent networks. Discussions frequently center on enhancing efficiency and transparency while mitigating financial crime risks. Observing how established banks adapt to these technological shifts remains important.
This initiative establishes a foundational DLT layer within the global financial messaging network, streamlining cross-border payments for enhanced efficiency and reduced operational friction.
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