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16th September
written by Tellus

Even the smallest of these big banks has extremely deep pockets. Please note that creating intermediary and correspondent accounts often involves dealing with third-party specialists regarding counterparty compliance. If you need intermediary bank accounts and correspondence, contact us for more information on how we can help you launch these services. Any account between correspondence banks and the banks for which they provide services is called Nostro or Vostro account. The correspondence bank operates through an agreement between a foreign bank and a national bank, under which a corresponding account, normally called a Vostro or Nostro account, is created with one bank for the other. When it comes to correspondence banking, the two banks generally expect to create reciprocal accounts. These accounts are created to allow the national bank to make payments or money transfers on behalf of the foreign bank. Cross-border transfers often take place between banks that do not have a pre-repaired financial relationship. In such cases, a correspondence bank must act as an intermediary for all transactions related to these payments. From a back-end perspective, the money is withdrawn from a local bank account (denominated in local currency) and a corresponding amount of money is paid into the customer`s or supplier`s account with their local bank (denominated in foreign currency) using the current exchange rate. The money in the buyer`s account is in an internal account of your bank.

The money to the customer or supplier comes from an account that the buyer`s local bank holds with a bank in the supplier`s country – the correspondent or intermediary account of the buyer`s bank with his intermediary or correspondent bank. The same account is called Vostro account by the counterparty bank – your account, but in our books. As a rule, in a correspondence relationship, the two banks keep accounts for each other in order to track direct debits and credits between the parties. The accounts that correspondence banks serve on behalf of foreign banks are called vostro by correspondence banks, which means “your account in our books”. The same account is called nostro by the foreign bank, which means “our account in your books”. Another correspondent bank in Germany trades foreign currency for the beneficiary. Most of the time (although this is not always the case), correspondence banks are located in the country where both currencies are on the national territory. As a rule, a standard communication protocol for conciliation between these banks is implemented (i.e. . SWIFT).

This is also necessary to find other channels of communication for the execution of these payments. Although conciliation can be achieved with proprietary systems, it is customary to use a standard protocol for conciliation. These two banks are third-party banks that consult with the beneficiary banks in order to facilitate international remittances and transaction operations. . . .

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