Money does not physically cross a border when an international payment is made. What moves is a series of adjustments to accounts that banks hold with each other.
The account relationship that makes it work
A bank in one country opens an account with a bank in another and keeps a balance there. That relationship lets it make payments in the foreign currency without a local licence.
The account is described from both sides using different terms, but the arrangement is the same: one institution holds money on behalf of another. Settlement is a debit here and a credit there.
When a customer sends money abroad, their bank instructs its correspondent to pay the beneficiary's bank. No cash travels, and no single institution sees the whole journey.
Why a payment passes through several banks
A direct relationship exists only where volumes justify the cost of maintaining one. Payments to smaller markets are routed through banks that do hold the relevant relationships.
Each additional hop adds a fee, a processing window and a cut-off time. A payment missing one institution's cut-off waits until the next business day in that time zone.
This is why transfer times vary so much by destination rather than by amount. The route determines the duration.
What happens at each compliance checkpoint
Every bank in the chain screens the payment against sanctions lists and its own risk rules. Any match, including a false one on a common name, halts the payment for manual review.
Institutions also apply rules about the countries and industries they will process payments for. A payment can be rejected by an intermediary even though both the sender and the beneficiary are acceptable to their own banks.
Because the sending customer has no relationship with the intermediary, they receive little explanation. The instruction returns with a generic reason.
Why banks have withdrawn from these relationships
Maintaining a correspondent relationship requires continuing due diligence on the other bank and its customer base. The cost is fixed and the risk of a compliance failure is significant.
Institutions have responded by ending relationships in markets where the volumes do not justify that cost. Some regions now have noticeably fewer available routes than a decade ago.
Fewer routes means less competition, higher fees and longer chains for the countries affected. The effect falls hardest on smaller economies and on remittance corridors.
What the alternatives change
Newer arrangements link domestic instant payment systems directly, bypassing part of the chain. Several bilateral and regional links of this kind now operate.
These reduce the number of intermediaries but do not remove the underlying requirement to settle in some currency somewhere. The compliance checks also remain.
Availability depends on which corridors have been connected, and the rules governing them differ by jurisdiction and continue to change.