How a cross-border payment travels

Why payments need correspondents

A bank pays another bank by moving money between accounts: its own account with the other bank, or both banks’ accounts at a third. Within one country, banks settle through a clearing or settlement system for the currency. Across borders, the payer’s bank and the payee’s bank rarely hold accounts with each other, and the payer’s bank may have no access to the clearing system of the currency.

A correspondent bank fills the gap. It holds accounts for other banks, its respondents, and makes and receives payments for them. A US dollar payment from a bank in Brazil to a bank in Germany is usually settled in the United States, between the dollar correspondents of the two banks.

Nostro and vostro accounts

The two names describe the same account, seen from each side.

When Bank B pays out of the account, it debits Bank A’s vostro account, and Bank A records a lower balance on its nostro account. A bank reconciles each nostro account against the statements its correspondent sends.

Serial payments: bank by bank

In a serial payment, the instruction and the funds travel together. Each bank receives the customer payment message, settles with the previous bank over their account, and sends the message on to the next.

Every bank in the chain sees the full customer payment, with the payer and the payee, and can screen it. Each bank that takes a fee can deduct it on the way, so the payee may receive less than the payer sent.

Cover payments: two routes

In a cover payment, Bank A sends the customer payment straight to Bank D, and sends the funds separately through the correspondents in a bank-to-bank payment, the cover. Bank D credits the payee once the cover arrives.

The cover method is faster and costs less, but for years the correspondents saw only a bank-to-bank transfer, without the customers behind it. In May 2009 the Basel Committee on Banking Supervision set out its expectations on the transparency of cover payments, and in November 2009 Swift introduced the MT 202 COV, a cover message that carries the customer details. Its ISO 20022 successor is the pacs.009 COV.

The messages

On Swift, cross-border payment instructions between financial institutions moved from the MT format to ISO 20022, and the period in which both formats ran side by side ended on 22 November 2025. Swift converts an MT payment instruction still sent after that date into its ISO 20022 equivalent, and charges for the conversion.

ISO 20022 messages name each party by its role. The debtor and the creditor are the payer and the payee; the debtor agent and the creditor agent are their banks. At each step, the instructing agent sends the message and the instructed agent receives it, and the correspondents in between are intermediary agents. Agents are usually identified by their BIC, and can also carry an LEI. Before any of these messages can be sent, the sender must hold an RMA authorisation from the receiver. Swift is moving postal addresses in these messages from free text to structured fields; in August 2026 it extended the timetable for that migration.

The UETR and tracking

The unique end-to-end transaction reference (UETR) identifies one payment along the whole chain. The first bank sets it, and every bank after it passes it on unchanged. Swift made it mandatory in the MT 103, MT 202 and MT 202 COV with its 2018 standards release, and ISO 20022 payment messages on Swift carry it too.

A UETR is a version 4 universally unique identifier (UUID): 32 lower-case hexadecimal characters in five groups, such as 9dbf6d2d-3db5-4e70-a516-6068da42d8a3. The first character of the third group is always 4, the version.

Banks that are members of Swift GPI report each step of a payment against its UETR in Swift’s tracker, up to the credit to the payee, so the payer’s bank can see where the payment is and what each bank deducted. See institutions on the Swift GPI member list.

Who pays the charges

The payer’s bank states in the customer payment who bears the charges.

What must travel with a payment

Recommendation 16 of the Financial Action Task Force (FATF) requires that information on the payer and the payee accompanies a wire transfer through the whole chain. An intermediary bank must keep that information with the transfer, and the payee’s bank needs procedures for transfers that arrive without it. The rule exists so that every bank can screen the payment against sanctions lists and authorities can trace it.

In June 2025 the FATF revised the Recommendation, now titled “Payment transparency”. The revision sets out who in the chain is responsible for adding the information and keeping it unchanged, standardises the payer and payee information for cross-border payments above USD or EUR 1,000, and introduces checks to detect misdirected payments. The FATF expects countries to implement it by the end of 2030.

• European Union. Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets, applicable since 30 December 2024.
• United States. The recordkeeping and travel rules in 31 CFR 1010.410, which apply to transmittals of funds of USD 3,000 or more.

What the directory shows

Each institution page in the directory shows the institution’s BIC, its LEI where one is mapped, its national bank codes, and how it is written as an agent in an ISO 20022 payment message. It also shows whether the institution is on the Swift GPI member list and which payment schemes list it. See how to read a BIC and which codes a payment needs.

Sources

• ISO 20022 for financial institutions: focus on payment instructions and Navigating the end of coexistence. Swift.
• Standards MT Release 2018: mandatory changes in category 1 and category 2, on the UETR. Swift.
• Due diligence and transparency regarding cover payment messages related to cross-border wire transfers, May 2009. Basel Committee on Banking Supervision.
• Correspondent banking, July 2016. Committee on Payments and Market Infrastructures (CPMI).
• FATF updates Standards on Recommendation 16 on Payment Transparency, June 2025. Financial Action Task Force (FATF).
• Regulation (EU) 2023/1113 on information accompanying transfers of funds and certain crypto-assets. EUR-Lex.
• 31 CFR 1010.410, records to be made and retained by financial institutions. Electronic Code of Federal Regulations.

Reviewed 2 November 2026. Message standards and payment rules change: Swift’s usage guidelines and the regulations themselves apply.

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