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International Payments & Cross-Border Transactions Flashcards

7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What is the key difference between the SHA, OUR, and BEN cost-sharing options in international wire transfers?

    Answer: They dictate which party (sender, recipient, or both) pays the transaction fees

    SHA (shared), OUR (sender pays all fees), and BEN (beneficiary pays all fees) are charge-sharing instructions that determine how bank fees are allocated between the sending and receiving parties in an international transfer.

  2. What is the purpose of ISO 20022 in the context of international payments?

    Answer: To provide a universal financial messaging standard that enables richer, more structured payment data

    ISO 20022 is a global standard for financial messaging that enables richer, more structured and consistent data in payment messages, improving automation, compliance, and reconciliation across international payment systems.

  3. Which of the following best describes the 'lifting fee' in an international payment?

    Answer: A fee charged by an intermediary or correspondent bank for processing the transfer

    A lifting fee is a charge levied by an intermediary or correspondent bank for handling and processing an international wire transfer as it passes through that institution.

  4. What is the primary purpose of Know Your Customer (KYC) requirements in cross-border payments?

    Answer: To verify the identity of clients and assess their risk profile to prevent financial crimes

    KYC requirements mandate that financial institutions verify and understand their customers' identities and assess the risk of potential money laundering or terrorist financing before facilitating cross-border transactions.

  5. Which payment system is used for high-value U.S. dollar transactions that often serve as the settlement leg for international payments?

    Answer: CHIPS

    CHIPS (Clearing House Interbank Payments System) is the primary U.S. private-sector system for large-value, same-day dollar transactions, including the dollar settlement of many cross-border payments.

  6. What does the term 'nostro account' refer to in international banking?

    Answer: A foreign currency account held by a domestic bank at a foreign correspondent bank

    A nostro account (from the Latin for 'ours') is an account that a domestic bank holds at a foreign correspondent bank, denominated in the foreign currency, used to facilitate international transactions in that currency.

  7. Under FATF Recommendation 16 (the 'Travel Rule'), what information must accompany cross-border wire transfers?

    Answer: Originator and beneficiary identification information including names and account numbers

    FATF Recommendation 16 (the Travel Rule) requires that originator and beneficiary identifying information — including names, account numbers, and addresses — travel with cross-border wire transfers to enable AML/CFT oversight.