Nested account definition

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

Cite this page

APA 7

Sanctions Evasion Reference. (2026, August 20). Nested account. https://sanctionsevasion.org/reference/glossary/nested-account/

Chicago

Sanctions Evasion Reference. “Nested account.” Last reviewed August 20, 2026. https://sanctionsevasion.org/reference/glossary/nested-account/.

BibTeX

@misc{ser-reference-glossary-nested-account,
  author = {{Sanctions Evasion Reference}},
  title  = {Nested account},
  year   = {2026},
  note   = {Last reviewed 2026-08-20},
  url    = {https://sanctionsevasion.org/reference/glossary/nested-account/}
}

The date is when this page was last reviewed, not when it was first published.

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.

Securities custody has the same shape in a different market: an omnibus account pools many clients behind one intermediary at a custodian, so the custodian screens the intermediary rather than the clients behind it.

Where this term is used

How is correspondent banking used to evade sanctions? — Using a chain of banks that each know only their own customer, so that a payment for a restricted party reaches a currency it could not access directly, without any bank in the chain seeing the whole transaction.
What are third-country bank accounts and how are they used? — Holding accounts in a jurisdiction unconnected to the restricted party, the goods or the contract, so that payments reach and leave the restricted economy without ever appearing to touch it.

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.

Where this term is used

Related terms

Sources