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Withdrawals

Overview​

A withdrawal is the process of sending funds from a customer wallet to an external destination — such as a bank account or financial institution. Withdrawals are initiated through the customer’s virtual account and require providing recipient details, referred to in the Connect Financial system as a counterparty.

Withdrawals are client-initiated and subject to strict compliance checks before being processed.

How Withdrawals Work​

  1. The client initiates a withdrawal via API
  2. The payload includes a payment_party field, which defines the counterparty (i.e., the destination of funds)
  3. If the counterparty doesn’t already exist, it is created automatically during the transaction and saved at the portfolio level
  4. The transaction is submitted and reviewed for compliance
  5. If approved, the funds are debited from the wallet and sent to the recipient
  6. Webhooks can be configured to notify your system when withdrawals have been processed
Counterparties

Note, it is currently not possible to reuse an existing counterparty through the Connect Financial API. You can, however, save and reuse a counterparty’s details though your own backend.

Key Concepts​

  • Counterparties are created as part of the withdrawal request.
  • Each portfolio maintains its own list of counterparties for record keeping.
  • When a withdrawal is initiated, the balance of the wallet is debited by the appropriate amount and marked with a pending status, indicating that the transaction is in process.
  • When the transaction is completed and the payment is processed on the appropriate payment rail (e.g. ACH, SWIFT, etc), the balance is moved marked as complete in the system.

Compliance Considerations​

All withdrawals undergo compliance checks, which may include:

  • AML/CTF screening
  • Sanctions list monitoring
  • Source of funds or recipient legitimacy
  • Manual review (when required)
info

In some cases, additional documentation may be requested before approving a withdrawal (e.g., invoice, proof of recipient).

Withdrawals may be delayed or rejected based on the outcome of these checks.

Example Use Case​

A business user wants to pay a supplier.

  1. They initiate a withdrawal request with the supplier's banking details.
  2. A counterparty is created and saved against the customer’s portfolio.
  3. The request goes through compliance.
  4. If approved, the USD wallet is debited and funds are sent via ACH or SWIFT.

Key Terms​

  • Withdrawal: Outbound movement of funds from the platform to an external financial entity.
  • Counterparty: The external recipient (e.g., a supplier or bank) of the withdrawal.
  • Recipient: The data object included in the withdrawal request that defines the counterparty.
  • Compliance Check: Internal screening process to ensure the transaction adheres to legal and regulatory requirements.