Correspondent Banking Risk and Controls Audit Training Course

Course Introduction

Correspondent banking enables financial institutions to access international payment systems, foreign currencies, clearing arrangements, trade finance services, and other banking capabilities through relationships with respondent institutions. These relationships can create complex risks because transactions may pass through multiple jurisdictions, institutions, currencies, payment channels, and intermediaries. The Correspondent Banking Risk and Controls Audit Training Course provides a comprehensive framework for auditing the governance, risk management, compliance, and control environment surrounding correspondent banking activities.

The course examines how financial institutions establish, approve, risk-rate, monitor, review, and terminate correspondent relationships. Participants will learn how to assess respondent-bank due diligence, ownership and management information, business models, jurisdictional exposure, regulatory status, financial crime risk, products and services, transaction volumes, and other factors used to determine the overall risk profile of a correspondent relationship.

Correspondent banking presents distinctive financial crime risks involving money laundering, terrorist financing, sanctions violations, proliferation financing, fraud, corruption, tax-related risks, and misuse of payment infrastructure. The programme therefore focuses on the audit of customer due diligence, enhanced due diligence, beneficial ownership, sanctions screening, transaction monitoring, suspicious activity escalation, payment transparency, and controls designed to identify and manage unusual or high-risk activity.

Particular attention is given to the complexity of nested relationships, payable-through arrangements, downstream institutions, third-party payment activity, intermediary banks, and transactions involving higher-risk jurisdictions or sectors. Participants will develop practical audit approaches for tracing payment flows, evaluating risk controls, testing transaction populations, reviewing alerts, assessing escalation processes, and determining whether the institution has sufficient visibility over activity conducted through its correspondent network.

The programme also addresses governance, contractual arrangements, risk appetite, information-sharing, data quality, technology controls, sanctions screening systems, transaction monitoring models, management information, regulatory reporting, and independent assurance. Participants will learn how to evaluate whether controls operate effectively across systems and organizational boundaries and how to identify weaknesses that could expose the institution to regulatory, financial, operational, reputational, and financial crime risks.

Through practical audit scenarios, relationship-risk assessments, transaction testing, data analytics, control evaluations, and an integrated correspondent banking audit case study, participants will strengthen their ability to plan and execute risk-based assurance engagements. The course enables auditors, compliance professionals, and risk specialists to translate correspondent banking risks into focused audit procedures, evaluate evidence, identify root causes, and communicate actionable recommendations for strengthening control effectiveness.

Duration

10 days

Who Should Attend

• Internal auditors responsible for correspondent banking and financial crime audits

• External auditors auditing banks and international financial institutions

• Correspondent banking relationship managers and business heads

• Financial crime compliance and AML/CFT professionals

• Sanctions compliance and screening specialists

• Transaction monitoring and suspicious activity investigation professionals

• Banking risk managers and enterprise risk professionals

• Compliance assurance and regulatory risk specialists

• Payments and international banking operations professionals

• Treasury and foreign exchange operations professionals

• Trade finance and cross-border payment specialists

• Financial crime data analytics and monitoring professionals

• Governance, risk, and compliance professionals

• Banking supervisors and regulatory examination professionals

• Audit managers and engagement leaders covering correspondent banking activities

Course Objectives

• Develop a comprehensive understanding of correspondent banking structures, services, transaction flows, business models, and the principal risks associated with respondent-bank relationships.

• Evaluate correspondent banking governance frameworks, risk appetite, relationship approval processes, delegated authorities, oversight arrangements, and management accountability.

• Apply risk-based audit techniques to respondent-bank due diligence, enhanced due diligence, risk classification, relationship approval, periodic review, and termination processes.

• Assess the quality of information collected about respondent institutions, including ownership, management, regulatory status, business activities, jurisdictions, products, and financial crime risk exposure.

• Evaluate AML/CFT, sanctions, fraud, proliferation financing, corruption, and other financial crime controls applicable to correspondent banking relationships and transactions.

• Audit controls designed to identify and manage nested relationships, downstream institutions, payable-through activity, third-party transactions, and other complex correspondent banking arrangements.

• Assess transaction monitoring and sanctions screening systems, including data quality, risk scenarios, thresholds, alert generation, investigation, escalation, and disposition controls.

• Apply payment-flow analysis and data analytics to identify unusual transaction patterns, high-risk corridors, unexpected counterparties, rapid movement of funds, and other correspondent banking risk indicators.

• Evaluate contractual arrangements, information-sharing requirements, customer transparency, payment messaging, record retention, and controls supporting effective oversight of correspondent relationships.

• Examine governance over higher-risk relationships, geographic exposure, risk acceptance, management exceptions, periodic reviews, remediation, and decisions to restrict or terminate relationships.

• Assess technology, data governance, automated monitoring, sanctions screening, model risk, system interfaces, access controls, and change management within correspondent banking control environments.

• Prepare evidence-based correspondent banking audit findings that identify control weaknesses, explain root causes, assess risk implications, and support effective remediation and senior management oversight.

Comprehensive Course Outline

Module 1: Foundations of Correspondent Banking and Risk-Based Auditing

• Correspondent banking models, respondent institutions, nostro and vostro arrangements, clearing relationships, payment services, and the role of intermediaries in international banking.

• Correspondent banking risk categories, including financial crime, sanctions, operational, legal, regulatory, credit, liquidity, reputational, and technology-related risks.

• Risk-based audit principles for correspondent banking, including scoping, materiality, relationship selection, transaction populations, sampling, and evidence requirements.

• The correspondent banking control lifecycle from relationship selection and onboarding through monitoring, periodic review, remediation, escalation, and termination.

Module 2: Correspondent Banking Governance, Strategy and Risk Appetite

• Governance structures for correspondent banking, including board oversight, senior management accountability, relationship ownership, compliance responsibilities, and independent assurance.

• Correspondent banking strategy, target markets, prohibited relationships, risk appetite, jurisdictional limits, products, currencies, and transaction corridors.

• Delegated authorities, relationship approval committees, risk acceptance, management exceptions, escalation procedures, and controls over higher-risk correspondent relationships.

• Audit evaluation of governance effectiveness, policy compliance, management information, risk reporting, committee oversight, and accountability for control deficiencies.

Module 3: Respondent Bank Due Diligence and Risk Assessment

• Respondent-bank identification, business profile, ownership structure, management, regulatory status, licensing, financial condition, reputation, and control environment assessment.

• Customer due diligence and enhanced due diligence requirements for correspondent relationships, including collection and validation of relevant institutional information.

• Jurisdictional, product, customer-base, transaction, sanctions, financial crime, and reputational risk factors used to determine correspondent relationship risk.

• Audit testing of due diligence completeness, source reliability, risk-rating methodologies, approval evidence, periodic refresh requirements, and unresolved information gaps.

Module 4: Correspondent Relationship Onboarding and Approval Controls

• Correspondent relationship onboarding processes, application requirements, risk assessments, business rationale, service specifications, and approval documentation.

• Relationship approval controls, senior management authorization, risk acceptance, compliance review, legal review, and segregation of business and control responsibilities.

• Contractual terms, permitted services, transaction restrictions, information-sharing obligations, audit rights, termination provisions, and escalation requirements.

• Audit testing for unauthorized relationships, incomplete approvals, unsupported risk acceptance, missing documentation, inappropriate exceptions, and weaknesses in onboarding controls.

Module 5: AML/CFT and Financial Crime Risk in Correspondent Banking

• Money laundering and terrorist financing risks arising from cross-border payments, correspondent accounts, high-risk jurisdictions, complex ownership, and movement of funds across multiple institutions.

• AML/CFT controls covering customer identification, risk assessment, enhanced due diligence, transaction monitoring, suspicious activity escalation, and ongoing relationship review.

• Financial crime risks involving fraud, corruption, tax-related activity, proliferation financing, organized crime, and misuse of legitimate payment infrastructure.

• Audit procedures for assessing control design, operating effectiveness, investigation quality, escalation processes, suspicious activity governance, and remediation of identified weaknesses.

Module 6: Sanctions Screening and Correspondent Payment Controls

• Sanctions risks affecting correspondent banking, including restricted parties, jurisdictions, vessels, goods, sectors, transactions, currencies, and payment counterparties.

• Sanctions screening across customers, respondent institutions, payment messages, beneficiaries, originators, intermediaries, and other relevant transaction participants.

• Screening systems, matching logic, thresholds, false-positive management, alert investigation, escalation, blocking or rejection controls, and system change governance.

• Audit testing of screening completeness, data quality, system configuration, alert handling, override controls, escalation, record retention, and governance over sanctions compliance.

Module 7: Transaction Monitoring and Payment Flow Auditing

• Correspondent payment flows, payment messages, transaction corridors, nostro and vostro activity, intermediary relationships, and identification of expected transaction behavior.

• Transaction monitoring scenarios for unusual volumes, rapid movement of funds, high-risk jurisdictions, unexpected counterparties, structuring, pass-through activity, and anomalous payment patterns.

• Alert generation, investigation, case management, disposition, escalation, suspicious activity reporting, quality assurance, and management oversight of monitoring processes.

• Audit techniques for testing transaction populations, tracing payment flows, validating monitoring scenarios, reviewing alerts, and identifying gaps between expected and actual activity.

Module 8: Nested Relationships, Payable-Through Accounts and Downstream Risk

• Nested correspondent relationships, downstream financial institutions, third-party access, payable-through arrangements, and the challenges of identifying ultimate users of correspondent services.

• Risks arising when a correspondent relationship provides indirect access to payment infrastructure for institutions that have not been directly assessed by the correspondent bank.

• Controls over transparency, respondent disclosures, downstream institution identification, transaction visibility, contractual restrictions, and monitoring of indirect activity.

• Audit procedures for identifying nested activity, testing downstream risk controls, tracing transactions, reviewing disclosures, and assessing whether risk visibility is sufficient.

Module 9: Cross-Border Payments, Trade and Higher-Risk Transactions

• Cross-border payment risks involving trade finance, remittances, foreign exchange, securities-related payments, high-value transfers, and complex international transaction structures.

• Geographic risk assessment covering higher-risk jurisdictions, sanctioned locations, offshore structures, financial centers, and corridors with elevated financial crime exposure.

• Trade-based financial crime indicators, unusual payment descriptions, inconsistent transaction values, complex counterparties, rapid settlements, and other cross-border anomalies.

• Audit testing of payment documentation, transaction purpose, counterparties, geographic exposure, trade-related information, exception handling, and escalation of unusual activity.

Module 10: Correspondent Banking Data Analytics and Risk Indicators

• Data sources for correspondent banking audits, including payment messages, account activity, respondent profiles, sanctions data, transaction monitoring systems, alerts, and relationship records.

• Risk indicators involving transaction velocity, value, corridor concentration, counterparties, payment descriptions, unusual timing, sudden changes, and deviations from expected relationship activity.

• Analytical techniques for segmentation, anomaly detection, network analysis, transaction clustering, relationship profiling, and identification of unusual payment behavior.

• Audit use of data analytics to test control completeness, identify high-risk relationships, challenge management risk assessments, prioritize samples, and support continuous monitoring.

Module 11: Technology, Systems and Automated Correspondent Banking Controls

• Correspondent banking technology architecture, payment platforms, sanctions screening systems, transaction monitoring solutions, customer databases, and interfaces between critical applications.

• Data quality, data lineage, reconciliation, completeness, timeliness, system interfaces, payment-message integrity, and controls supporting reliable financial crime monitoring.

• Automated monitoring and screening models, scenario configuration, threshold management, model validation, performance monitoring, change management, and technology dependencies.

• Audit procedures for access controls, system configurations, automated controls, application changes, interface failures, exception management, cybersecurity dependencies, and data integrity.

Module 12: Ongoing Monitoring, Periodic Review and Relationship Remediation

• Periodic correspondent relationship reviews, risk-rating refreshes, due diligence updates, transaction behavior assessment, management information, and escalation of changing risk.

• Trigger events requiring enhanced review, including ownership changes, regulatory actions, adverse information, unusual activity, sanctions developments, geographic changes, and material shifts in business activity.

• Remediation programmes, enhanced monitoring, restrictions, risk acceptance, relationship exit, account closure, and controls governing decisions to maintain or terminate relationships.

• Audit testing of review timeliness, trigger-event identification, remediation tracking, escalation, management decisions, outstanding deficiencies, and closure of high-risk relationships.

Module 13: Correspondent Banking Fraud, Corruption and Misconduct Risks

• Fraud risks involving payment manipulation, account takeover, false instructions, unauthorized transactions, identity deception, collusion, and misuse of correspondent accounts.

• Corruption and bribery risks associated with relationship acquisition, intermediary arrangements, commissions, fees, agents, public-sector relationships, and conflicts of interest.

• Internal misconduct risks involving unauthorized overrides, inappropriate risk acceptance, screening manipulation, alert suppression, improper access, and management interference.

• Audit investigation techniques, evidence preservation, transaction reconstruction, root-cause analysis, escalation, loss assessment, and control remediation for correspondent banking misconduct.

Module 14: Legal, Contractual, Regulatory and Information-Sharing Controls

• Legal and regulatory considerations affecting correspondent relationships, cross-border payments, customer information, sanctions obligations, AML/CFT requirements, and regulatory reporting.

• Contractual controls governing permitted services, prohibited activity, information-sharing, audit rights, transaction restrictions, record retention, and respondent responsibilities.

• Information requests, regulatory inquiries, law enforcement cooperation, suspicious activity information, data protection considerations, and controlled disclosure processes.

• Audit assessment of contractual compliance, regulatory obligations, information-sharing controls, record retention, legal escalation, and governance over cross-border regulatory requirements.

Module 15: Correspondent Banking Reporting, Assurance and Emerging Risks

• Correspondent banking management information, risk dashboards, relationship inventories, transaction metrics, sanctions and AML indicators, exceptions, and senior management reporting.

• Independent assurance, control testing, compliance monitoring, internal audit, external assurance, regulatory examination, issue tracking, and validation of remediation.

• Emerging risks from instant payments, digital currencies, fintech intermediaries, alternative payment systems, artificial intelligence, new payment corridors, and evolving financial crime techniques.

• Audit findings, root-cause analysis, risk assessment, management action plans, remediation tracking, governance reporting, and evaluation of whether corrective actions address underlying control weaknesses.

Module 16: Integrated Correspondent Banking Risk and Controls Audit Case Study

• End-to-end audit planning for a correspondent banking portfolio, including relationship risk assessment, audit scope, control mapping, sampling strategy, transaction populations, and evidence requirements.

• Practical testing of respondent due diligence, risk ratings, relationship approvals, contractual controls, sanctions screening, transaction monitoring, and ongoing review processes.

• Analysis of payment flows, nested relationships, high-risk corridors, unusual activity, sanctions alerts, data-quality exceptions, fraud indicators, and technology control weaknesses.

• Preparation and presentation of an integrated correspondent banking audit report covering findings, root causes, risk implications, recommendations, management responses, and follow-up procedures.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: training@upskilldevelopment.com Tel: +254 721 331 808

Training Venue 

The training will be held at our Upskill Training Centre. We also offer training for a group (at a discount of 10% to 50%) at requested location all over the world. The Onsite course fee covers the course tuition, training materials, two break refreshments, buffet lunch, airport transfers, Upskill gift package, and guided tour.

Visa application, travel expenses, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Upskill certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: training@upskilldevelopment.com, +254 721 331 808

Terms of Payment:

Unless otherwise agreed between the two parties’ payment of the course fee should be done 3 working days before commencement of the training so as to enable us to prepare better.