Cover payments refer to payments made through correspondent banks rather than directly between banks that lack a relationship. They are commonly used due to efficiency and cost considerations. Cover payments make up a large portion of payments sent via the SWIFT system using MT202 and MT103 message types. While cover payments provide benefits like reduced costs, they can complicate monitoring for sanctions compliance and money laundering due to limited transparency in messages. The industry is working on solutions like an enhanced MT202 format to increase transparency and assist monitoring.