Respondent bank definition

The respondent is the customer in a correspondent relationship. What the correspondent knows about it comes from due diligence performed at onboarding and periodically thereafter: its ownership, its regulator, its customer base, its expected volumes.

The Wolfsberg Group’s guidance is built around keeping that picture accurate, because the failure mode is gradual. A respondent whose activity drifts away from what it described, or whose customer base has changed without notice, is the ordinary route by which restricted flows enter a clean correspondent chain.

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.
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.
Customer due diligence — The ongoing process of understanding a customer's identity, ownership, expected activity and risk, and checking that actual activity remains consistent with it.

Where this term is used

Related terms

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