Cash Correspondent Monitoring

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Some banks have withdrawn their correspondent banking services, deeming the risks greater than the rewards.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.

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.