Why Monitor Your Cash Correspondents?
The Problem | Regulation | Risk | A Collective Approach
A single bank will operate a network of cash correspondent banks around the globe to enable it to trade in foreign markets.
Due to increasing internal third-party oversight and regulatory requirements, banks need to carry out ongoing monitoring of their cash correspondent agents.
Reluctance of cash correspondents to respond to questionnaires, a lack of standardisation, and duplication of effort have caused groups to turn to Thomas Murray for a comprehensive solution.
In the wake of AML failures, sanction busting and other systemic failures, there is growing regulatory momentum for monitoring correspondent banks, with pressure mounting from CFTC, OCC, CASS and Client Asset Protection rules.
Regulators expect higher levels of monitoring and due diligence of service providers, including contingency plans.
Pro-active monitoring of operational resilience is required, a traditional credit assessment is no longer enough.
The risks associated with correspondent banking relationships are not confined to regulatory penalties alone.
Banks risk reputational damage, loss of business and customer confidence, and restrictions on financial activity by not governing banking relationships effectively.
Some banks have withdrawn their correspondent banking services, deeming the risks greater than the rewards. Those that remain in the space and can effectively manage the associated risks will have an advantage.
A Collective Approach
Thomas Murray’s collective industry solution aims to solve the increasing cost of compliance (including fines) and banks’ difficulty in identifying risks in certain jurisdictions.
By standardising the monitoring approach and risk methodology, improving response rates and eliminating duplication of effort in this non-competitive risk management function, Thomas Murray is delivering a much-needed solution.
Launched with a large group of initial banks, the programme continues to swell as banks recognise the unique benefit of a collective approach.
A comprehensive service:
Data and documentation is collected by Thomas Murray using our data management platform SupplierSelect for Financial Services.
Thomas Murray’s analysts then validate banks’ responses, ensuring completeness and follow up where necessary to obtain further information.
Responses are then analysed and scored against the industry’s agreed methodology.
Individual banks are assigned a risk rating, reviewed by an expert risk committee before being published to the client and responding bank.
The risks assessed:
Financial Risk (including credit rating, capital ratios, earning performance and other indicators of financial strength, viability and stability).
Operational Risk (including account servicing, systems controls, operational disruption, financial crime compliance and cybersecurity).
Access to the submitted response.
Access to the Cash and Treasury market profile.
Access to the individual report.
Access to the benchmarking dashboard.
Industry Defined Questionnaire Response Validation and Scoring
Cash Correspondent Risk Analysis dashboard
Interactive Risk Graded Visual Analytics, Reports and Benchmarking
Network Management support for banks in meeting regulatory, client and internal obligations for the periodic review of local agent banks. Thomas Murray assesses over 300 sub-custodians, supported by on-site visits to banks, contingency providers, and local capital market infrastructural entities in 95 markets.
Cash Market Information
Interactive data on local market practices for payments and treasury operations, covering over 100 markets worldwide. Regulations, FX trading rules, benchmark information and other data are updated continuously and supported by newsflashes.
SupplierSelect for Financial Services
Manage counterparty monitoring, due diligence, and service-provider selection projects. SupplierSelect for Financial Services simplifies the process of risk management, from drafting and issuing complex questionnaires to assessing and benchmarking responses through embedded analytical tools.
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Thomas Murray is the leading provider of data, risk assessments and analytics on global capital markets and financial counterparties.
Banks, funds and capital market institutions use Thomas Murray's products and services to supplement their internal resources, meet regulatory obligations and reduce costs.