Legal Definitions - intermediary bank

An intermediary bank is a financial institution that acts as a middleman in the process of transferring funds between two other banks. It is not the depositary or payor bank, but rather a bank to which an item is transferred in the course of collection.

For example, if someone in the United States wants to send money to someone in Europe, their bank may use an intermediary bank to facilitate the transfer. The sender's bank would send the money to the intermediary bank, which would then send it to the recipient's bank in Europe.

Another example is when a business in one country wants to pay a supplier in another country. The business's bank may use an intermediary bank to transfer the funds to the supplier's bank.

Intermediary banks are important because they help facilitate international transactions and ensure that funds are transferred securely and efficiently.