Sanctions Evasion Reference

Nested account

The use of a bank's correspondent account by that bank's own respondent institutions, giving unnamed third banks indirect access to the correspondent.

also known as

downstream correspondent clearing

reviewed

2026-08-20

Nesting, sometimes called downstream correspondent clearing, means the correspondent is providing service to institutions it never onboarded and may not be able to name. Each layer of nesting removes another institution from the correspondent’s view.

It is not prohibited, but it must be known about and controlled. Undisclosed nesting is a recurring finding in enforcement actions, because it is the mechanism by which a bank in a restricted jurisdiction obtains dollar clearing through two intermediaries that each believe they know their customer.

Where this term is used

Related terms

  • Correspondent banking — An arrangement in which one bank holds an account for another and provides payment and other services on its behalf, usually to give it access to a foreign currency.
  • Respondent bank — The bank that holds an account with a correspondent and relies on it to make payments or provide services in a currency or market it cannot reach directly.
  • Wire stripping — Removing or altering originator, beneficiary or reference information from a payment message so that screening at an intermediary bank does not identify a restricted party.

Sources

  1. Correspondent banking principles and guidance. The Wolfsberg Group, 2022.

All glossary terms