Correspondent Banking
Posted by Ripon Abu Hasnat on Friday, June 13, 2014 | 0 comments
Correspondent banking refers to a financial
institution that conducts business transactions on behalf of another financial
institution. It takes up roles like accepting deposits and gathering
information on behalf of another financial institution. Correspondent banks are
mostly used in foreign countries and they act as agents of the original bank.
There are several advantages to this arrangement:
1.
We can do any
necessary reclamation through the U.S. Treasury as normal. The U.S. FI is
responsible for reclaiming the payments. The Payment History Update Screen
(PHUS) record shows the reclamation request and response. This differs from IDD
reclamations, which require manual actions.
2.
We can process
non-receipt actions through normal input. Treasury then processes them. PHUS
displays the nonreceipt request and Treasury’s response. This differs from IDD
nonreceipt reports, which require manual actions, for information see,
Allegations of Nonreceipt of International Direct Deposit GN 02402.250.
3.
The financial
institution’s routing number is available on the Routing Transit Number
Database (RTND) screen. (For the RTND data entry screen, see MSOM QUERIES
005.005.)
4.
The U.S. FI can
send a Notice of Change (NOC) directly to us if the direct deposit information
changes because of an FI merger or FI systems update.
5.
In areas where
IDD is not available, correspondent banking gives the beneficiary a way to avoid
the problems with check delivery by choosing direct deposit.
6.
Unlike IDD,
this arrangement is available to a beneficiary residing in the U.S. who wants
to deposit his or her benefits in an FI outside the U.S.
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