AML/CFTR 3.3.5 Correspondent banking relationships generally

(1) Before a bank (the correspondent) establishes a correspondent banking relationship with a bank (the respondent) in a foreign jurisdiction, the correspondent must do all of the following:
(a) gather sufficient information about the respondent to understand fully the nature of its business;
(b) decide from publicly available information the respondent's reputation and the quality of its regulation and supervision;
(c) assess the respondent's AML/CFT policies, procedures, systems and controls, and decide that they are adequate and effective;
(d) obtain senior management approval to establish the relationship;
(e) document the respective responsibilities of the respondent and correspondent, including in relation to AML and CFT matters;
(f) be satisfied that, in relation to the respondent's customers that will have direct access to accounts of the correspondent, the respondent:
(i) will have conducted CDD for the customers and verified the customers' identities;
(ii) will conduct ongoing monitoring for the customers; and
(iii) will be able to provide to the correspondent, on request, the documents, data or information obtained in conducting CDD and ongoing monitoring for the customers.
(2) Without limiting subrule (1) (b), in making a decision for that provision, the correspondent must consider all of the following:
(a) whether the respondent has been the subject of any investigation, or civil or criminal proceeding, relating to money laundering or terrorism financing;
(b) the respondent's financial position;
(c) whether it is regulated and supervised (at least for AML and CFT purposes) by a regulatory or governmental authority, body or agency equivalent to the Regulator in each foreign jurisdiction in which it operates;
(d) whether each foreign jurisdiction in which it operates has an effective AML/CFT regime;
(e) if the respondent is a subsidiary of another legal person — the following additional matters:
(i) the other person's domicile and location (if different);
(ii) its reputation;
(iii) whether it is regulated and supervised (at least for AML and CFT purposes) by a regulatory or governmental authority, body or agency equivalent to the Regulator in each jurisdiction in which it operates;
(iv) whether each foreign jurisdiction in which it operates has an effective AML/CFT regime;
(v) its ownership, control and management structure (including whether it is owned, controlled or managed by a PEP).
(3) If the correspondent establishes a correspondent banking relationship with the respondent, the correspondent must:
(a) if the respondent is in a high risk jurisdiction — conduct enhanced ongoing monitoring of the volume and nature of the transactions conducted under the relationship; and
(b) in any case — at least annually review the relationship and the transactions conducted under it.
Derived by QFCRA RM/2019-8 (as from 1st February 2020)