TN 125 (02-19)

GN 02402.120 Correspondent Banking

A. Introduction to correspondent banking

Beneficiaries living outside the United States may have direct deposit to a U.S. FI or to an FI in any International Direct Deposit (IDD) country. Correspondent banking occurs when a U.S. financial institution (FI) sets up an arrangement with a partner FI in the beneficiary's country of residence to transfer funds each month.

NOTE: TXVI recipients must meet certain criteria to receive payments abroad. For the rare instances when we consider an SSI recipient eligible for payments while living abroad, see GN 02402.110B, SI 00501.411, and SI 00501.415.

B. Process for correspondent banking

This section explains the correspondent banking solicitation, enrollment, and payment process.

1. Solicitation for correspondent banking

The U.S. FI asks the partner FI to solicit direct deposit by sending letters to its customers who receive U.S. Government payments.

2. Enrolling in correspondent banking

The beneficiary (or representative payee) applies through the partner FI in the country where he or she banks. The partner FI sends the information to the U.S. FI. The U.S. FI will:

  • directly input the information to the Master Beneficiary Record (MBR) through Auto Enrollment; or

  • send the information to the Federal Benefits Unit (FBU) for manual input to the record; or

  • send the information to the Office of Earnings and International Operations (OEIO) for manual input to the record.

NOTE: If domestic (i.e., non-boarder) field offices receive this information, forward to OEIO.

Once the information processes, the direct deposit looks as if the payment is made to and stays at the U.S. FI.

3. Payment process through correspondent banking

We deliver the payment to the account at the U.S. FI. We have completed our responsibilities when the payment has gone to the U.S. FI account that the beneficiary requested. The U.S. FI then transfers the payment to the foreign FI. The foreign FI posts the payment to the beneficiary’s account at that FI.

C. Advantages of correspondent banking

This section lists the advantages of correspondent banking:

  • We can do any necessary reclamation through the Department of the Treasury as normal. The U.S. FI is responsible for reclaiming the payments. For Title II, the Payment History Update Screen (PHUS) record shows the reclamation request and response. This differs from IDD reclamations, which require manual actions. For information about IDD reclamations, see GN 02408.900 through GN 02408.950.

  • We can process nonreceipt actions through normal input. Treasury then processes them. For Title II, PHUS displays the nonreceipt request and Treasury’s response. This differs from IDD nonreceipt reports, which require manual actions. For information about allegations of nonreceipt, see GN 02402.250.

  • The financial institution’s routing number is available on the Routing Transit Number Database (RTND) screen. (For the RTND data entry screen, see MSOM QUERIES 005.005.

  • The U.S. FI can send a Notice of Change (NOC) directly to us if the direct deposit information changes because of an FI merger or FI systems update.

  • In areas where IDD is not available, correspondent banking gives the beneficiary a way to avoid the problems with check delivery.

  • Unlike IDD, this arrangement is available to a beneficiary residing in the United States who wants to deposit his or her benefits in an FI outside the United States.

D. Disadvantages of correspondent banking

This section lists the disadvantages of correspondent banking :

  • Depending on the FI’s involvement, the MBR may not show a record of the account the payment goes to after it reaches the U.S. FI.

  • Our agency, the Federal Reserve Bank, and Treasury have no control over the amount charged by the U.S. FI to forward the payment or by the foreign FI to receive it. The FIs may deduct any charges from the payment.

  • The payment is usually in U.S. dollars upon receipt, so the foreign FI may charge to convert the payment to the local currency. With IDD in most countries, the payment arrives in local currency. The only exception is when the Federal Benefits Officer in a region notifies us that a majority of the beneficiaries would prefer IDD in U.S. dollars.


    Currency conversion charges may apply

  • The consular office does not usually receive a list of payments through correspondent banking, which occurs with IDD or paper checks.

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GN 02402.120 - Correspondent Banking - 02/20/2019
Batch run: 02/20/2019