Trade Compliance Screening: A Balancing Act
There is growing pressure for banks to step up their internal procedures for vetting trade finance documents in order to meet the latest regulations and best practices expected by organisations such as: Financial Action Task Force, International Chamber of Commerce, Financial Conduct Authority, and Monetary Authority of Singapore.
At the same time, a slowdown in global trade affecting margins, coupled with the increasing cost of compliance, means that banks are looking for cost-effective ways to meet their compliance needs.
To truly understand the risk profile in financing any trade, you need to look not only at the details of a customer requesting the finance and their counterparties, but also the specific details of the trade—the goods, their destination, and their transport. The process involves a considerable amount of data checking and process management.