Correspondent banking involves financial institutions, often larger international banks, providing banking services to smaller banks or credit unions in different jurisdictions. These services can include facilitating cross-border transactions, currency exchange, and access to global financial networks. While correspondent banking is essential for international trade and finance, it can also pose money laundering and terrorism financing risks. Therefore, correspondent banks must conduct due diligence on their correspondent relationships and implement anti-money laundering (AML) controls to prevent illicit activities.
