When a correspondent relationship is ended: what to do first
When a correspondent relationship ends, the first task is not to dispute the decision. It is to secure any client transfer already in progress, confirm the exact cut-off date in writing, and check whether the information that must accompany those transfers is still complete. A replacement counterparty and a formal complaint come only after these three points are settled.
Where this sits in the framework
Correspondent relationships between crypto-asset service providers fall within the scope of Regulation (EU) 2023/1113 (TFR), which sets requirements for the information that must accompany a transfer of funds or crypto-assets between providers. Regulation (EU) 2023/1113 (TFR) applies due diligence obligations before such a relationship starts and while it continues. An abrupt end does not suspend those obligations for transfers already committed to the pipe.
Regulation (EU) 2023/1114 (MiCA) governs the authorisation and ongoing conduct of the crypto-asset service provider itself. A correspondent's exit is frequently the result of a review the counterparty makes of its own exposure under that framework, rather than anything the client did.
What actually changes
The immediate risk is operational, not reputational. Transfers already submitted may complete under the old arrangement, or may stall if the counterparty applies the cut-off retroactively. Clients whose settlement depends on that rail face delay. Any transfer that lacks complete originator or beneficiary information becomes harder to explain once the relationship that carried it is gone. The provenance trail for funds already in transit needs to be reconstructed before it becomes unavailable, not after the fact.
A correspondent that disappears mid-transfer breaks a chain in much the same way a defective transfer can break a chain further downstream: compare When an assignment breaks the chain of title for the same structural problem in a different register.
What to do, in order
- Get the exact end date in writing, and confirm whether any wind-down period covers transfers already submitted. This is the compliance officer's request, made the same day notice arrives.
- List every client transfer that depends on this correspondent and flag which of them are mid-flight. Operations, not compliance, holds this list and should hold it within hours, not days.
- Check that the originator and beneficiary information already attached to open transfers is complete under the current rail. Incomplete files need to be closed out before the rail disappears.
- Notify affected clients once the wind-down period and its effect on settlement timing are known — not before, and not with a guess.
- Start due diligence on a replacement correspondent under the same information-accompanying-transfer requirements. The old file cannot simply be copied across to a new counterparty.
- Record the counterparty's stated reason, or the absence of one, in the compliance file. That record matters if the termination is later disputed.
Correspondent agreements that say nothing about notice periods leave the same gap as contracts that say nothing about outputs of a process; see When the contract is silent on AI output for the same drafting problem in a different setting.
Who decides
| Question | Who answers it |
|---|---|
| Whether the relationship ends, and when | The counterparty, unilaterally, usually without a duty to give reasons |
| Whether an open transfer completes under the old rail | Both providers' operations teams, by reference to the wind-down terms |
| Whether the termination is itself unlawful or discriminatory | A court or the counterparty's home supervisor, only on a formal complaint |
| Whether your own AML risk assessment needs updating | Your own compliance function, not the counterparty |
If a formal complaint escalates as far as the counterparty's own supervisor, the procedural pattern resembles the one described in An on-site inspection is announced authorisation: a fixed notice, a document request, and a timetable you did not set.
Three forks worth planning for
If the counterparty gives no reason at all, treat it as a business decision and start the replacement search without waiting for an explanation.
If the reason given is a sanctions or watchlist name match, dispute it promptly and in writing, with supporting evidence attached. False matches on names are common and correctable.
If several correspondents end relationships within a short period, treat it as a signal about your own risk profile rather than coincidence, and revisit the risk assessment before someone else revisits it for you.
If the counterparty's exit is challenged in court rather than before a supervisor, the procedural rhythm is closer to When an injunction application is served.
What this page does not decide
This page does not tell you whether the termination breaches your contract with the correspondent. That turns on the notice clause you signed, not on AML law. It does not quantify any penalty or fee, and it does not replace the wind-down plan your own risk assessment should already require you to keep on file.
Verified
Verified: 4 February 2025. Primary sources: Regulation (EU) 2023/1113 (TFR), in force from 30 December 2024; Regulation (EU) 2023/1114 (MiCA), in force from 30 December 2024. Source texts: eur-lex.europa.eu.
Related situations
A related but separate question — whether the counterparty itself even qualifies as an obliged entity — is covered on its own page: see When the obliged entity status is disputed: what to.
How we help
A first response comes from a partner within minutes during business hours. A written scope of work, once we understand how many jurisdictions and registries are involved, whether a deadline is already running, and whether a counterparty is disputing the termination, follows within one business day. No two files carrying a broken correspondent relationship look alike, and the scope reflects that rather than a fixed rate.
FAQ
What is the first step when a correspondent relationship is ended?
Confirm the exact end date in writing, then secure transfers already in progress. Disputing the decision comes later, not first.
Which deadline is already running?
The wind-down period stated by the counterparty starts running from the date of notice, not from the date you read it. A formal complaint, if you make one, runs on its own separate timetable set by whichever forum receives it.
Who decides, and on what evidence?
The counterparty decides unilaterally, on its own risk assessment. If you dispute that decision, a supervisor or a court decides only on the evidence you and the counterparty put in front of them.