Financial Crime
May 9, 2025
As financial crime evolves, correspondent banks must prioritise wire transfer transparency to meet global regulations and safeguard the financial system.
Correspondent banking is vital in facilitating global trade, enabling cross-border remittances, and connecting emerging markets to the international financial system. Yet the sector continues to face scrutiny over its vulnerability to financial crime. In this context, payment transparency – reinforced by updated global wire transfer regulations – is not just a regulatory obligation, but a critical tool for maintaining trust, resilience, and financial integrity.
The structural opacity of correspondent banking makes it a prime target for abuse by money launderers, sanctions evaders, and other illicit actors. Cross-border payments often involve multiple intermediary institutions, each with varying levels of visibility over the originator and beneficiary. Criminals exploit these blind spots to inject illicit funds into the global financial system undetected.
Regulatory bodies have long recognised this vulnerability. In 2023, the Financial Action Task Force (FATF) reaffirmed its commitment to Recommendation 16, which requires that accurate and complete information on both the originator and beneficiary accompany all cross-border wire transfers. This remains the global benchmark for wire transfer transparency.
Across jurisdictions, the FATF Recommendation 16 has been implemented through a range of legislative instruments, recently updated to align with evolving risks:
These regulations create a comprehensive global framework, but enforcement remains inconsistent, and many institutions struggle to keep pace with data quality and technological demands.
Regulators are beginning to act. In 2023, the UK Financial Conduct Authority (FCA) fined Guaranty Trust Bank (UK) Ltd £7.6 million for persistent failures in AML controls, including deficiencies in correspondent banking due diligence and transaction monitoring. Inadequate oversight of wire transfer data played a significant role in the enforcement action.
Similarly, the long-running Danske Bank scandal, which resulted in over $2 billion in penalties in 2022, demonstrated how a lack of transparency in correspondent relationships can allow vast sums of illicit funds to flow undetected. Shell companies, falsified payment data, and weak governance over nested relationships were central themes in the case.
Common typologies involving correspondent banking include:
The global migration to ISO 20022, now adopted by SWIFT for cross-border payments as of March 2023, offers a transformational opportunity to improve payment transparency. ISO 20022 enables richer and more structured data fields, making tracing payments easier and applying advanced analytics for risk detection.
Institutions are also increasingly deploying AI and machine learning to identify anomalies in transaction data and assess risks in real time. However, these technologies’ effectiveness depends entirely on the completeness and quality of wire transfer information; the adage “garbage in, garbage out” still rings true.
For correspondent banks, compliance with wire transfer regulations must evolve from a defensive exercise to a proactive strategy. Those that embed transparency into their payment architecture will gain a competitive edge, including the ability to retain relationships, access key markets, and withstand regulatory scrutiny.
This requires:
The FATF’s 2024 mutual evaluations have shown a clear shift in focus from formal compliance to effectiveness. Regulators are asking not only whether controls exist, but whether they work and whether financial institutions can demonstrate their impact in disrupting financial crime.
As financial crime becomes more sophisticated and cross-border in nature, correspondent banks must lead the charge in making payment flows visible, traceable, and accountable. Wire transfer transparency is not just about compliance; it is a vital defence against abuse of the global financial system.
Institutions that ignore these expectations risk fines, reputational damage, and exclusion from key markets. Those that embrace them will help reshape correspondent banking for a more secure and transparent future.
The Payments Association
St Clement’s House
27 Clements Lane
London EC4N 7AE
© Copyright 2024 The Payments Association. All Rights Reserved. The Payments Association is the trading name of Emerging Payments Ventures Limited.
Emerging Ventures Limited t/a The Payments Association; Registered in England and Wales, Company Number 06672728; VAT no. 938829859; Registered office address St. Clement’s House, 27 Clements Lane, London, England, EC4N 7AE.
Log in to access complimentary passes or discounts and access exclusive content as part of your membership. An auto-login link will be sent directly to your email.
We use an auto-login link to ensure optimum security for your members hub. Simply enter your professional work e-mail address into the input area and you’ll receive a link to directly access your account.
Instead of using passwords, we e-mail you a link to log in to the site. This allows us to automatically verify you and apply member benefits based on your e-mail domain name.
Please click the button below which relates to the issue you’re having.
Sometimes our e-mails end up in spam. Make sure to check your spam folder for e-mails from The Payments Association
Most modern e-mail clients now separate e-mails into different tabs. For example, Outlook has an “Other” tab, and Gmail has tabs for different types of e-mails, such as promotional.
For security reasons the link will expire after 60 minutes. Try submitting the login form again and wait a few seconds for the e-mail to arrive.
The link will only work one time – once it’s been clicked, the link won’t log you in again. Instead, you’ll need to go back to the login screen and generate a new link.
Make sure you’re clicking the link on the most recent e-mail that’s been sent to you. We recommend deleting the e-mail once you’ve clicked the link.
Some security systems will automatically click on links in e-mails to check for phishing, malware, viruses and other malicious threats. If these have been clicked, it won’t work when you try to click on the link.
For security reasons, e-mail address changes can only be complete by your Member Engagement Manager. Please contact the team directly for further help.
