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Product Spotlight: Cash Correspondent Bank Monitoring

by Ross Whitehill

Investors and regulators globally have the same objective: to protect their assets and those of their clients and regulated entities. But, for decades, cash correspondent banking arrangements have not been scrutinised in quite the same way as securities banking, and for no apparent reason.

Some say that the correspondent banking role has been more aligned with balance of trade and relationships than the securities industry, but, given the fungibility of cash and the higher vulnerability/ease of movement, this is an odd situation.

As regulators like CFTC, OCC, FCA, CBI, CSSF have turned their attention to ensuring that there is a broader responsibility on regulated entities to monitor all counterparties, correspondent banking groups have started to look at their cash correspondent arrangements in more detail.  In response to this, Thomas Murray, in collaboration with many of the world’s major correspondent banking groups, launched the Cash Correspondent Bank Monitoring managed service, earlier this year. Initiated and launched with over 30 groups the initial coverage represents more than 500 of the largest cash clearers globally.

The service was inspired by broad regulatory and commercial objectives that:

  • Firms introduce adequate organisational arrangements to minimise the risk of loss of client assets and cash,
  • Make a record of the grounds upon which they satisfy themselves as to the appropriateness of their selection and appointment of a counterparty,
  • Make a record of each periodic review of their selection and appointment of a counterparty, and,
  • Enable banks to demonstrate comparative benchmarks of chosen providers, versus other local market alternatives.


Cash correspondent data and documentation is collected and validated through a managed service model (refer Figure 1) using Thomas Murray’s market recognised Supplier Select for Financial Services (SSFS) technology. All validated responses are analysed and scored against a proprietary risk methodology (refer Annex) and assigned a risk grading in the familiar alpha symbology e.g. AA+.  Once the scores have been applied and risk grades determined, they are reviewed by an expert risk committee, before being published to the client and responding bank.  


Figure 1: Overall process




A Cash Correspondent Risk Analysis Dashboard (refer Figure 2) allows clients to compare their cash agents, by jurisdiction and currency, and determine where their correspondent sits relative to its universe or against the full Thomas Murray universe of respondents. 

Figure 2: Dashboard



Detailed analytics allow clients to further look at the findings overall, by individual risk, sub-risk component and down to the individual question level. (Refer Figure 3)

Figure 3: Individual Risk



Clients also gain access to Thomas Murray’s Cash and Treasury Market Profiles and daily Newsflashes for balancing market infrastructure with bank side analysis to support on-going monitoring. Where applicable, site visits to respondent banks to support on-going and pro-active participation in the service is performed.

The feedback from respondents to this industry driven initiative has been extremely positive.  Most respondents have been very complimentary on the ease of completion. For this we thank the huge effort of both the Working Group that defined the managed service model and questionnaire, and the respondent banks in Canada and South Africa which pilot tested everything. Respondents welcome the industry standardisation, the feedback we provide and ability to use the questionnaire with other non-Thomas Murray clients. Covid-19 has not impacted the service other than perhaps inevitably, some groups have asked for questionnaire submission deadline extensions. But this is not a global bank wide issue and the majority could revert within reasonable time frames.

Thomas Murray is equally working with each respondent to ensure the best possible response set is released to our mutual clients by providing feedback on the initial submitted questionnaire level. Our reporting also allows the responding banks to see where they are relative to competitors in the market, via the benchmarking provided

With this industry initiative, the lack of cash correspondent banking scrutiny, especially in today's remote operational environment, has collectively been addressed. 


Annex: Scope of Coverage & Questionnaire Coverage


Thomas Murray defines Cash correspondent banks as any third-party bank that is contracted to hold cash balances or provide related services on behalf of another financial institution.  The most common types of service include:

  1. International funds transfers (high/low-value cross-border payments)
  2. Cash management services (including deposit accounts, overnight investment accounts)
  3. Foreign exchange services
  4. Lines of credit
  5. Loans and letters of credit
  6. Cheque clearing
  7. Pouch activities

The questionnaire/service does not cover service-specific questions, but rather areas of risk, which are applicable and can consistently be applied to any type of cash service, as above.

The focus of Cash Correspondent Bank Monitoring is operational and delivering risk assessments as part of a managed service providing a validated data set, reporting, benchmark and analytics. The output is stand alone and/or could be aggregated with existing KYC, Cyber and Credit Analysis carried out by banks today to support a comprehensive monitoring programme.  The risks assessed are Financial and Operational.  Financial Risk may be obvious but Operational Risk includes Account Servicing, Systems Controls, Operational Risk Management, Operational Disruption, Financial Crime Compliance (AML/KYC), and other factors such as corporate structure, strategy, regulatory environment, and internal operations.



To learn more about Cash Correspondent Bank Monitoring, or any of Thomas Murray's products and services, please contact: 

Derek Duggan

Director, Head of Sales | +44 (0) 20 8600 2300