The challenges of compliance - a trade finance specialist perspective

Opinion | 21 September 2017

Doing business in multiple locations across numerous jurisdictions and cultures, in different languages and with incompatible systems and trust values has become more difficult than ever.

Apart from complex transactions, the burden of lengthy compliance and operational processes, changing tax regimes, political instability, lack of trust, anti-bribery and corruption, cyber-crime and increase in fraud are just some of the daily challenges facing both financial institutions and their clients across the globe.

Regardless of size and balance sheet, financial institutions are required to meet more stringent mandatory rules, guidelines and regulatory demands from local, national and international government and regulating bodies before doing business.

It is hardly surprising that, rather than fostering an atmosphere of capability, competitive service, trust and willingness to serve client needs with solid repeat business, in the new era of de-risking, organisations will defer approvals, selectively transact low-value instruments with inflated punitive fees or merely turn down business completely.

The business case for and the requirements of international trade have never been stronger. We follow the emergence and strength of the new Silk Road routes and rebalancing of economic wealth where once undeveloped and unexploited home industries now import raw materials from global sources and re-manufacture as high-value exports.

This growth of new global trading powerhouses needs to be serviced efficiently, presenting many new opportunities for all players in the trade finance ecosystem.

So, how do firms ensure we safeguard ourselves, our institutions and our clients?

Compliance and due diligence regulation is one element, but the mindset of compliance professionals also needs to be addressed.

Is their role one of assisting trade or finding reasons to prevent honest business? Are they gatekeeping policemen or protagonists?

The actions of compliance staff will affect not only a company, but also the responsibility and liability of named individuals within that firm as they tackle global and domestic factors, headcount freezes, growing trade volumes, broadening categories of business to be considered (i.e. FX, equities, funds) and constantly changing multi-level regulation.

Prompted by compliance failures such as lack of controls and legal understanding across markets, it is no longer acceptable or possible for compliance personnel to hide behind a corporate veil of anonymity when authorising and checking proof of funds. No surprise that few will wish to take on the significant risks.

But rather than intransigence, compliance officers also need to apply common sense, judgement, and integrate commercially proven platforms and systems with Artificial Intelligence to the process of confident checking.

We advocate the use of DD, AML and PEP technology across the organisation, remaining mindful of the need for cash-flow, protection of the company and its staff from cyber-attack, reputational and transaction risks, and to successfully navigate the changing landscape of compliance challenges.

As a specialist trade finance institution, we have integrated our home-built technology across all departments, such that compliance is at the core of our operations and part of the ethos of our business.

With our agile approach incorporating market leading AI-based due diligence systems and credit checking software, informed specialist knowledge, SWIFT capability, competitive pricing structures and embracing rather than fearing compliance, we are able to facilitate global trade competitively, effectively and efficiently.

Ultimately, we are confident that we meet and beat the challenge of compliance, through purposefully sharing and implemented tight compliance measures, technology investments and systems integration.

We look forward to further growing our international footprint and reputation as the institution of choice for global clients looking for trade finance instruments for cross border trades.

By Graham Bright, Head - Compliance and Operations, Euro Exim Bank Ltd

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