In the drive to enhance cross-border connectivity and expand international business, banks in the Middle East and North Africa (MENA) region increasingly seek to establish correspondent relationships with foreign and regional peers. However, the process of onboarding other banks as respondents or partners, presents a unique set of hurdles for MENA institutions. Understanding these challenges is the first step toward building more resilient, efficient, and transparent onboarding processes, which are essential for driving sustainable growth and regional integration.
One of the most formidable challenges for MENA banks is the diversity and complexity of regulatory frameworks. While efforts at harmonisation are under way, the MENA region remains a patchwork of local and international regulatory regimes. Banks must adhere to both domestic regulations and the compliance standards imposed by international partners, which can differ sharply in requirements for anti-money laundering (AML), counter-terrorist financing (CTF), sanctions screening, and know your customer (KYC) practices.
This divergence often leads to delayed onboarding cycles, as compliance teams attempt to navigate conflicting obligations, decipher documentation standards, and interpret ambiguous rules. The need for repeated clarification or additional documentation from respondents frequently prolongs the process further.
In recent years, global regulators and correspondent networks have called for heightened due diligence on counterparties, especially in regions perceived as higher risk. MENA banks are often subjected to intensive scrutiny and requests for enhanced due diligence from foreign correspondents. Responding banks must be able to supply robust evidence of their own AML controls, customer due diligence processes, and the provenance of funds.
For some institutions, especially smaller or less internationally experienced banks, assembling and presenting this information in a manner that meets international expectations can be a significant undertaking. The absence of standardised practices across the region exacerbates the challenge, creating inconsistencies that international partners may interpret as red flags.
Comprehensive, transparent, and accessible documentation is a recurring stumbling block in the onboarding process. Banks are typically required to provide a vast array of organisational, compliance, and financial documents, often with translations into English or other international languages. Delays frequently occur when documentation does not meet format requirements or when supplementary information is demanded at short notice.
Legacy systems and manual documentation processes, still common in parts of the MENA region, can make it difficult to retrieve and submit the necessary records swiftly. These inefficiencies slow down onboarding and may even jeopardise the establishment of new correspondent relationships.
An increasingly important dimension in correspondent banking due diligence is a global bank’s need to understand not only its immediate MENA counterparty but also the downstream clients, the entities to which that MENA bank may itself offer clearing or correspondent services. From a global compliance perspective, the risks associated with these third-party, indirect relationships can be significant, as the respondent bank effectively acts as a conduit for institutions and transactions further removed from the direct relationship.
Many international correspondents now expect their MENA partners to provide comprehensive, verifiable, and readily digestible information about their own correspondent and clearing activities, including details on downstream clients and their underlying controls. This expectation, highlighted in BAFT publications such as "Uneven Regulations in Payments" and the "Respondent’s Playbook", serves to reassure the global bank that the extended network is subject to the same standard of risk management, regulatory screening, and transparency demanded at the direct relationship level.
While a number of leading MENA banks have begun to institute systems that capture, monitor, and present this type of ‘global footprint’ data, its reliable and standardised presentation remains a developing area for the region as a whole. Fortunately, guidance and best practices from industry associations as well as regional payment schemes (such as Buna) are encouraging greater commonality in data handling, especially around ISO 20022 adoption and more consistent KYC processes across both banks and non-bank FIs.
By proactively addressing this downstream transparency, through robust technology, regular information-sharing, and active participation in global KYC utilities, MENA banks can position themselves as responsible, preferred partners to leading correspondents. This becomes even more important in light of the trend toward ‘de-risking,’ where banks are increasingly selective about indirect participants and scrutinise the controls in place at every level of the value chain.
The MENA region has been subject to heightened sanctions, geopolitical tensions, or concerns about financial crime risks. As a result, some international banks have adopted a "de-risking" approach, withdrawing from new relationships that are seen as potentially problematic from a regulatory or reputational perspective.
MENA banks seeking to onboard other banks therefore face barriers rooted not in their own processes or controls, but in global market perceptions. This environment can lead to extensive questioning, higher expectations for transparency, and at times outright rejection of onboarding requests, especially if the respondent bank falls within an embargoed or conflict-affected jurisdiction.
With accelerating digital transformation, there are growing expectations for seamless integration of compliance, sanctions screening, and transaction monitoring systems. MENA banks sometimes grapple with legacy IT infrastructure that is not aligned with the systems and protocols expected by major global correspondents.
This can cause friction in onboarding, as data cannot always be exchanged automatically or in standardised formats, requiring labor-intensive manual reviews and increasing the risk of errors or delays.
The MENA region’s linguistic and cultural diversity, while a strength in serving diverse clients, introduces additional complexity to onboarding. Communication gaps, misunderstanding of requirements, or slow turnaround times due to time zone differences can impede rapid information exchange and prolong review processes.
As the global banking sector continues to expand and digitise, MENA banks are responding to these onboarding challenges with innovation and investment:
As MENA banks seek to streamline their onboarding processes and build trusted, long-term relationships, maintaining up-to-date KYC information with reputable global information providers, such as BankCheck, can further reduce friction in correspondent banking relationships. By ensuring that accurate, current data is readily accessible to international partners, regional banks can help facilitate swifter due diligence and open doors to a broader range of correspondent opportunities. In an increasingly interconnected and regulated financial environment, this kind of proactive information management supports both compliance and growth objectives.
Ready to streamline your bank onboarding process? Talk to the BankCheck team today to discuss how we can help your institution overcome some of these challenges and thrive in the evolving MENA banking landscape.
