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do not register deposits or transfer funds to banks not doing business in their countries. With few exceptions, the actual funds held in any foreign currency account (whether for a bank or for its customer) are held in the bank's correspondent account in that currency's home country.
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Even where a bank has branches or affiliates in multiple jurisdictions, balances in a foreign currency account in one jurisdiction are held with a correspondent account at either that bank's branch or affiliate in the foreign country, or at another institution. For example,
119:(BNY). When the Swiss trader instructs its bank to pay the money, Credit Suisse debits the trader's account and transfers dollars from its correspondent account at BNY to ING's account at BofA. Then, ING credits the dollars to the oil company's dollar account in Amsterdam.
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62:. A bank will typically require correspondent accounts for holding currencies outside of jurisdictions where it has a branch or affiliate. This is because most
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for another financial institution. Correspondent accounts are established through bilateral agreements between the two banks.
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of oil for $ 40 million to a Swiss trading company who is a customer of
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to receive deposits from, make payments on behalf of, or handle other
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Commonly, correspondent accounts are the accounts of foreign
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that require the ability to pay and receive the domestic
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115:(BofA) and Credit Suisse holds its dollars at
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111:. ING Amsterdam holds its dollars at
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171:Title 31 of the United States Code
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144:Nostro and vostro accounts
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179:(e)(1)(B), United States
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186:European Central Bank.
177:Title III, Section 311
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166:§ 5318A(e)(1)(B)
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