Correspondent & Reimbursement check0 / 1 answered · 0 correct
Check 1
Does a correspondent relationship mean Bank A guarantees every obligation of Bank B?
What is Correspondent Banking?
Why one bank often needs another bank to reach currencies, markets or clients.
Banks do not all connect everywhere
A bank may use another financial institution to make payments, clear currencies, hold accounts or support trade transactions in places where it has no direct infrastructure.
Correspondent relationship
The relationship is institution-to-institution and usually includes due diligence, account arrangements, messaging permissions and operating rules.
Trade-finance role
Advising, reimbursement and settlement may involve correspondent banks even when the commercial parties never speak to them.
Relationship is not endorsement
A bank having a correspondent connection with another bank does not automatically mean it guarantees all that bank’s transactions or credit risk.
Standards / source note: Correspondent and reimbursement arrangements depend on bank agreements, current SWIFT standards and, where incorporated, ICC rules such as URR 725.
Remember thisCorrespondent access helps banks operate internationally; it is not a blanket guarantee of another bank.
Finished this lesson?
Mark it complete. Your progress stays on this device.