Counterparty

“Counterparties” in the context of incoming and outgoing transfers refers to the entities involved in a financial transaction. In any transfer of funds, there are at least two parties:

1. Outgoing Transfers (Sending Counterparty): The party that initiates the transfer, sending funds out of their account. This could be an individual, a business, or any other entity that moves money to another party.
2. Incoming Transfers (Receiving Counterparty): The party that receives the funds into their account. Like the sending counterparty, this can be an individual, a business, or any other entity that is the beneficiary of the transferred money.

For instance, if Company A transfers money to Company B, Company A is the sending counterparty and Company B is the receiving counterparty. In banking and financial services, understanding counterparties is essential for managing risks, especially under regulations designed to prevent money laundering and financing of terrorism. Financial institutions conduct due diligence on the counterparties of their clients to ensure the legitimacy of the transactions.