Definition
Correspondent Banking
An arrangement in which one bank holds deposits and provides payment and other services for another bank, giving the respondent's customers indirect access to the correspondent's network.
By Bart Mierzejewski · Founder, FinCrime Desk · Reviewed Sep 19, 2026
Why it matters
Correspondent relationships concentrate risk: the correspondent is exposed to customers it never onboarded. Most of the largest AML enforcement actions in the last two decades involve correspondent or nested activity.
In practice
US law imposes specific due diligence on foreign correspondent accounts, prohibits accounts for foreign shell banks, and requires enhanced scrutiny for accounts maintained for banks in jurisdictions of primary money-laundering concern. Nested correspondent relationships — where a respondent provides access to its own downstream banks — are the specific pattern examiners probe.