What Is an Intermediary Bank? Are They Important?

An intermediary bank is a third-party bank that facilitates transfers between a sending bank and a receiving bank.

Intermediaries are typically large commercial banks with an international presence, facilitating transactions in specific currencies.

In this article, we’ll break down the role that an intermediary bank plays in supporting your foreign currency account and the risks that can come from weak intermediary relationships.

Feel free to use the table of contents to jump ahead to any sections that are immediately relevant to your search.

Table of Contents

  1. What Is an Intermediary Bank?
  2. Intermediary Bank Risks
  3. Frequently Asked Questions
  4. Ready to Explore Your Options?

What Is an Intermediary Bank?

Intermediary banks form an important network of the global banking system. They operate as a third-party bank that facilitates transfers between a sending bank and a receiving bank. They are typically large commercial banks with an international presence.

With the above in mind, you may be wondering what is the difference between an intermediary bank and a correspondent. Well, that’s a great question.

In practice, there is very little that differentiates an intermediary from a correspondent. In fact, in different parts of the world, the terms are used interchangeably. That said, one general rule is that correspondent relationships can often support a wider range of currencies, while intermediaries typically support only one currency.

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Intermediary Bank Risks

Before opening an account in a foreign country, we strongly encourage prospective account openers to consider the intermediary and correspondent relationships that a bank has in place.

This is critical for a few reasons, including:

Facilitating Transfers

In order to facilitate international transfers, most international financial institutions are required to have intermediary bank relationships. With this in mind, if you have any intention of sending and receiving transfers outside of the jurisdiction where the account is being opened, the bank will need to have intermediary or correspondent bank relationships in place.


You’ll find that many offshore banks have multiple intermediaries in place. There are several reasons why financial institutions may have multiple intermediary relationships, including facilitating different currencies. In fact, it is very common for financial institutions to have one USD intermediary, and others for GBP, EUR, and so on for other major currencies.

That said, another important reason for multiple intermediary bank relationships is to continue facilitating transactions in the unfortunate event when one relationship is terminated. Of course, if an intermediary relationship is terminated for any material reason (e.g. regulatory or compliance concerns), it is likely that all intermediary relationships will be canceled.

Third-Party Assessment

Lastly, in order to receive intermediary bank services, financial institutions have to navigate complex compliance and regulatory screening.

In other words, if a large international bank provides intermediary or correspondent services to the financial institution you are considering, this suggests they have basic systems in place.

While this is far from a guarantee that the bank is suitable for protecting your money, it is an indication that they have managed to pass basic compliance and regulatory checks.

Frequently Asked Questions

Below are two of the most common questions that we receive from people looking to open accounts offshore and questioning intermediary bank relationships. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.

What Is Meant By Intermediary in Banking?

Intermediary refers to banks that facilitate transfers on behalf of other financial institutions. In other words, before a transfer can arrive at its destination, it has to pass through an intermediary bank.

This relationship is important for a range of reasons, most importantly because certain financial institutions do not have direct permission to send and receive certain currencies without the use of a third party.

Am I Required to Use an Intermediary Bank When Making a Wire Transfer?

Whether you’re required to use an intermediary bank will depend on the sending and receiving banks.

For example, if you’re sending transfers between two large institutions, it’s possible they will not require intermediaries. In fact, both of these institutions may be intermediaries themselves.

Alternatively, if you’re sending transfers from a small bank, your transfer will almost certainly pass through an intermediary.

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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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