Lesson Learned: KYC and Correspondent Banks

Biggest mistake I made early on was underestimating the ripple effect of KYC requirements for correspondent banking. Had a client, perfectly legitimate operation, but their jurisdiction raised red flags for our correspondent bank, not for us directly. Suddenly, a seemingly open corporate account in a reputable jurisdiction became incredibly difficult to service for international wires. We had to scramble to find alternative routes, costing time, money, and frankly, some trust with the client.

It hammered home that your institution's compliance isn't just about your direct relationship with the client. It's also about your partners' comfort levels, and their partners' comfort levels. A robust understanding of the entire chain's risk appetite is critical when setting up offshore structures, even for entirely legal activities. Always vet not just the direct bank, but their correspondent relationships too.