Correspondent account

Correspondent account: an account that one bank holds with another bank. Russian banks hold correspondent accounts with the Bank of Russia for rouble settlements and with other banks for settlements in foreign currency. For the bank that owns it, such an account is a nostro account (“our account with you”); for the bank where it is held, it is a loro, or vostro, account (“your account with us”).

How an international payment moves through it

A bank cannot directly debit an account in another country. A transfer goes along a chain. The payer’s bank sends a message, for example via SWIFT, and the money is debited from its correspondent account at the correspondent bank. The correspondent credits it to the beneficiary’s bank or to the next bank in the chain. Each intermediary bank checks the payment and may charge a fee.

The currency determines the route. A payment in US dollars almost always goes through a bank with access to dollar settlements, a payment in euros through European banks, and a payment in yuan through banks with access to the Chinese system.

The supplier’s bank details sometimes list the intermediary bank separately, as Intermediary bank or Correspondent bank. These details are copied into the payment exactly, without abbreviations.

Where a payment can get stuck

• the correspondent bank does not handle payments from Russia or from the payer’s country;
• the intermediary bank’s compliance team has requested documents and is holding the transfer;
• the beneficiary’s bank has no correspondent account in the required currency, and the chain becomes long;
• the intermediary bank has deducted its fee, and the beneficiary receives less than the invoice amount.

That is why the same payment to the same country may go through for one sender and get stuck for another.

The broker’s role

A payment route is exactly this: the set of correspondent accounts the money will pass through. For each payment, we select an agent from our pool whose route to the supplier’s country is working right now. If a route closes, there are other agents: Route selection.