Counterparties

What is a Counterparty?

A counterparty is an external individual or business that participates in financial transactions with your bank or customers. Counterparties represent the "other side" of a transaction—the recipients of payments or senders of funds.

Counterparties are

External to your platform: Not users of your application, but third parties involved in transfers
Identity-verified: Undergo compliance screening (watchlist checks) to meet regulatory requirements
Associated with accounts: Can have external bank accounts and/or external crypto wallets attached for receiving funds

Counterparty Types

Counterparties can represent individuals or businesses.

Type	Description	Examples
Individual	A person	Freelancers, family members, individual vendors
Business	A company or organization	Suppliers, partners, corporate clients

Ownership Types

Counterparties can be scoped to different levels of your organization.

Scope	Use Case
Customer-owned	A counterparty belonging to a specific customer
Bank-owned	A counterparty belonging to your bank/organization

Use Cases

Fiat transfers: Send ACH, wire, RTP, FedNow or EFT payments to a counterparty's external bank account
Crypto transfers: Send cryptocurrency to a counterparty's external wallet
Payment tracking: Associate transfers with specific recipients for reporting and reconciliation
Compliance: Maintain audit trails and satisfy travel rule requirements for transfers

Counterparty vs. Customer

Aspect	Customer	Counterparty
Relationship	Direct user of your platform	External party in transactions
Identity verification	Full KYC/KYB	Watchlist screening
Accounts	Platform accounts (fiat & crypto)	External bank accounts & wallets
Onboarding	Complete user onboarding flow	Created via API when needed

Counterparty Model

The following examples show the structure of individual and business counterparty objects.

{
  "created_at": "2024-09-19T23:36:58.367733Z",
  "updated_at": "2024-09-19T23:36:59.791494Z",
  "guid": "926f24ed35aebb8bb45623283e614099",
  "type": "individual",
  "bank_guid": "bank_guid",
  "customer_guid": "customer_guid",
  "state": "verified",
  "labels": null,
  "compliance_decisions": [
    {
      "type": "person_watchlists",
      "state": "passed",
      "failure_codes": []
    }
  ]
}

{
  "created_at": "2024-09-23T16:51:12.669696Z",
  "updated_at": "2024-09-23T16:51:13.969713Z",
  "guid": "83716793476895a971f7fc232ce202e9",
  "type": "business",
  "bank_guid": "bank_guid",
  "customer_guid": "customer_guid",
  "state": "unverified",
  "labels": null,
  "compliance_decisions": [
    {
      "type": "business_watchlists",
      "state": "passed",
      "failure_codes": []
    }
  ]
}

Counterparty States

State	Description
`storing`	Initial state immediately after creation. The counterparty record is being set up and stored in the platform. No compliance screening has occurred yet.
`unverified`	The counterparty has been fully set up, but no compliance decisions exist yet, or previous decisions have expired or been invalidated. The counterparty may still be used for certain operations but has not passed screening.
`verified`	The counterparty has an active, passing watchlist screening. Ready for use in transfers and payments.
`rejected`	The counterparty has an active compliance decision that failed. Cannot be used for transactions until the issue is resolved.

Compliance Decisions

An array of decisions determined by the verification of a counterparty. Each compliance_decision contains a type, state, and any failure_codes that may be returned.

Compliance Decision States

State	Meaning
`passed`	Watchlist screening passed—no matches found. Counterparty is verified.
`failed`	Watchlist screening failed—potential match found. Counterparty is rejected.
`expired`	The decision has aged past its validity period and needs to be re-run.
`invalidated`	The decision was manually invalidated (e.g., counterparty details changed).

When a counterparty is rejected, the compliance_decisions[].failure_codes array contains the specific reasons.

Key Behavioral Notes

Simpler verification: Counterparty verification requires only watchlist checks—no KYC document verification, selfies, or other extensive checks
Expiring decisions: The expired_at timestamp indicates when the decision becomes invalid. After expiration, the counterparty reverts to unverified and needs re-screening
Rejected counterparties blocked: Rejected counterparties cannot participate in transfers
Multiple failure codes possible: A single screening can identify multiple issues (e.g., both a watchlist match and PEP status)
Re-verification available: If counterparty information is updated or time passes, you can trigger a new identity verification to potentially clear a previously rejected counterparty