What best describes a Payable Through Account (PTA)?

What best describes a Payable Through Account (PTA)?

• A. An arrangement where the respondent bank approves every transaction.
• B. An arrangement where the respondent bank's customers can conduct their own transactions through the respondent bank's correspondent account without pre-clearing.
• C. A trust account for employees.
• D. A savings account within the respondent bank.

Answer: (B)

Payable Through Account describes a setup where the respondent bank provides its correspondent account to customers of another bank, allowing those customers to use the respondent bank’s payments rails to initiate and clear transactions without the respondent bank pre-clearing each one. The essential point is that end users can move funds through the respondent bank without upfront screening of every transaction by that bank; instead, the responsibility for KYC/AML due diligence rests with the customer bank and its customers. This differs from systems where every payment is pre-cleared before it can be processed. It’s not a trust account for employees and not simply a savings account; it’s specifically about using the respondent bank’s payment infrastructure on behalf of another bank’s customers.

Payable Through Account describes a setup where the respondent bank provides its correspondent account to customers of another bank, allowing those customers to use the respondent bank’s payments rails to initiate and clear transactions without the respondent bank pre-clearing each one. The essential point is that end users can move funds through the respondent bank without upfront screening of every transaction by that bank; instead, the responsibility for KYC/AML due diligence rests with the customer bank and its customers. This differs from systems where every payment is pre-cleared before it can be processed. It’s not a trust account for employees and not simply a savings account; it’s specifically about using the respondent bank’s payment infrastructure on behalf of another bank’s customers.