Jun 27, 2022
Intermediary banks or correspondent banks are used by some banks to transfer money between countries.
An intermediary bank — or correspondent bank — is sometimes needed to complete international wire transfers. International wire transfers via the SWIFT network are typically how money is sent between banks in different countries. When the currency being sent does not match the currency used in the receiving bank account, an intermediary bank or correspondent bank is more likely to be needed to facilitate the transfer of funds.
How does an Intermediary Bank / Correspondent Bank work?
To transfer money, banks must hold accounts with each other. Since there are too many banks for one bank to open accounts with every other bank, banks usually choose certain banks to open accounts. If a transfer is needed between banks that don’t have accounts open with each other, then the bank initiating the transfer must use an intermediary or correspondent bank to pass on the funds on their behalf.
When an intermediary bank is required, payments will be transferred to the intermediary bank before being sent to its final destination bank account.
Are Intermediary Banks and Correspondent Banks the same?
Intermediary banks and correspondent banks are both used by banks to facilitate the transfer of funds internationally. The difference between correspondent banks and intermediary banks depends on where in the world the receiving bank is located. In some cases, correspondent banks are different from intermediary banks; in other cases, correspondent banks are a type of intermediary bank and are essentially the same thing.
In some countries, correspondent banks are used when handling transactions that involve a change in currency, while intermediary banks are used when handling a single currency.
When does an Intermediary Bank / Correspondent Banks need to be used?
An intermediary bank or correspondent bank is used when the bank sending the money and the bank receiving the money need a middle man. The intermediary bank/correspondent bank acts on behalf of the sender bank. For example, you may need an intermediary bank or correspondent bank when:
Two banks in different countries don’t have an established relationship; or
The currency being sent from one country does not match the currency used in the receiving bank account in another country.
Do I need to provide Intermediary Bank / Correspondent Banks info to LiquidTrust?
While you must always enter the details about your bank account, including bank branch address and other information - but you do not have to provide the Intermediary Bank information, LiquidTrust maintains this information in our records for all banks around the world.
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US-based users of LiquidTrust can send payments to 200+ countries worldwide in USD and in 40+ foreign currencies without having to ask for bank information from your suppliers, vendors, contractors, and freelancers. In addition, vendors anywhere in the world can use LiquidTrust to invoice Clients, even if those Clients are not users of LiquidTrust. LiquidTrust makes it easier to send and receive freelancer and vendor payments, anytime, anywhere.
