Correspondent bank

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Correspondent banking is the banking the name of a financial institution with headquarters in countries to which a domestic credit institution has a business relationship maintains order here on remittances handle or other external transactions.

General

The importance of correspondent banks has declined sharply internationally since international transfers have been processed using international payment systems with a clearing character. Since the SWIFT payment system is not a supranational clearing system, the clearing entries still require the involvement of correspondent banks. The role of the correspondent bank, on the other hand, is retained in foreign trade financing for letters of credit , document collection and return loans . The involvement of correspondent banks then results in a special situation under international private law , which affects the legal relationships of the banks involved. The correspondent banks have different levels of cooperation with one another.

Legal issues

In Germany, credit institutions have to observe special duties of care when choosing their correspondent banks so that they do not work with letterbox banks or illegal shadow banks . After § 25k KWG they have sufficient publicly available information , seek means of the correspondent institution and its business and management structure both before and during such a business relationship understand the nature of business of the correspondent institution in full and on its reputation and its controls to combat To assess money laundering and terrorist financing as well as the quality of banking supervision . In addition, it must be ensured that they do not establish or continue a business relationship with a credit institution whose accounts are known to be used by a mailbox bank to prevent the use of the financial system for the purpose of money laundering and terrorist financing, and it must be ensured that the correspondent institution does not conduct any transactions via transit accounts. In § 25m KWG prohibited transactions are listed, which are associated with shell banks, in particular the creation or maintenance of accounts in the name of shell banks. As these provisions are based on an EU directive , they apply in all EU member states .

historical development

Since the liberalization of capital movements after the Second World War, credit institutions began to set up bilateral bank connections in order to set up international payments . For a long time, contact with a correspondent bank was by post . The authenticity of documents could be checked on the basis of exchanged signature lists. With the advent of telex connections , key tables were exchanged which enabled an authenticity check based on key features for certain document fields (for example amount, currency, order date, bank branch). Messages have been exchanged between correspondent banks via the electronic communication system SWIFT since 1973 . In 1974 the magazine for the entire credit system reported that the large giro centers had well over 1,000 A correspondent banks.

tasks

In payment transactions, correspondent banks take on the task of crediting payments from the ordering bank to the beneficiary customer of the correspondent bank or of forwarding them to the beneficiary's bank. In the documentary business, the correspondent bank takes over the handing over of certain documents submitted by the exporter via his house bank to the importer step by step against payment of the transaction . If a letter of credit also engages a correspondent bank abroad, this is entrusted with various functions. It can be a mere “advice bank” , but it can also act as a payment and settlement agent or even a confirmation bank. The foreign correspondent is the acceptance credit tasked by the exporter submitted drawn drafts to accept upon handing over the documents. According to their general terms and conditions, banks in Germany are liable under banking law for the “careful selection and instruction of third parties”; Third is the correspondent bank.

Other business areas can be:

Within the euro area, there are often reciprocal account connections between the larger banks or the processing takes place via the central banks . For payments in a third currency - in a currency that is neither the home currency in the payer country nor the home currency in the recipient country - another correspondent bank is used for the actual payment process; this process is called cover acquisition. If the correspondent bank is used intensively, the banks provide each other with credit lines known as swing . The credit institutions often keep reciprocity statistics on mutual business allocation .

species

If both institutes have a reciprocal bank account, one speaks of an A correspondent ; if there is only a business relationship, it is a B correspondent . Account details make a distinction with regard to account management. In the case of the nostro account , the correspondent bank maintains the clearing account from the point of view of a bank, while the opposite is true for the loro account.

See also

Individual evidence

  1. ^ Dorothee Einsele, Banking and Capital Markets Law , 2006, p. 120.
  2. ^ Karl Friedrich Hagenmüller , Der Bankbetrieb, 9th edition, 1982, p. 607.
  3. ^ Journal for the entire credit system, Volume 27, 1974, p. 453
  4. ↑ Dorothee Einsele, Banking and Capital Markets Law , 2006, p. 110.
  5. ^ Dorothee Einsele, Banking and Capital Markets Law , 2006, p. 158.
  6. ↑ no. 19 (2) AGB Sparkassen
  7. ↑ Deutsche Bundesbank (form 7006) Directory of foreign correspondent banks ( Memento of the original from June 7, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.bundesbank.de
  8. ↑ Example is a payment from Germany to South Africa in US dollars , payable to a correspondent bank in New York City