Trade Based Money Laundering
Compliance in trade finance due diligence is a must for all Financial Institutions, multinational corporations, and trade finance providers.
Compliance in trade finance due diligence relates to:
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Export Controls: Export control regulations are federal laws that prohibit the unlicensed export of certain commodities or information for reasons of national security.
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Know your customer (KYC): Verifying counterparties (corporations, banks, etc.) as part of “know your customer” regulations.
International Sanctions: Ensuring that all parties to a transaction undergo a “sanction screening”, using complex matching algorithms against official sanction lists, including the Office of Foreign Assets Control (OFAC), the European Union (EU), and the United Nations (UN).
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Anti-money-laundering (AML) and Counterterrorist Financing (CTF): Detecting and preventing money laundering and terrorist financing. Preventing transactions including weapons of mass destruction and dual-use goods (dual-use software, technology, documents) by using “red flags” and IT-supported behavioral profiling techniques, and reporting suspicious activities to the authorities.
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Since trade mostly happens between entities, not from the same jurisdictions, there are multiple laws to be followed by the involved parties including the FI enabling the transaction.
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In the present scenario, being prudent is about more than just managing operational and market risks – it’s about compliance.
The question remains on which is “the standard” that FIs should imbibe, that is recognized and enforceable by their home or host regulator.
Vertex Compliance assists the clients to achieve their original objective of conducting Trade Finance by reducing risk and doing business more efficiently and effectively, as well as helping them live up to their own standards, to ensure that their trade partners are not on any sanctions lists and that their banks are legitimate, it gives client reassurance to trade with confidence.
​The compliance cost is a major detrimental factor for financial institutions, especially small and medium financial institutions. The balance between radically
higher costs of compliance and potentially devastating fines is a decisive factor for many organizations. It also has an indirect opportunity cost as trade financing being turned down more often than not.
In this scenario, Vertex Compliance can assist by providing highly effective client advisory services including TBML policies, ways, and means to spot and identify red flags, Trade finance-related audits, and sanction advisory.
Services on Offer
Development of Corporate Trade Finance / TBML Policy on the risk appetite of the organization
Development and Implementation of Risk management system setting limits, documentation requirements, and parameters for screening, monitoring, and reporting
Educate clients on how to ascertain companies are correctly incorporated and their incorporation is current and not hindered by any legal action or pending actions.
Reporting standards and standards on information sharing.
Need-based and tailor-made training suiting your line of business and complexity and jurisdiction of operations. Training on TBML to the trade finance operations, compliance, and legal teams.
Identifying the products, target markets, prospective customers, and desirable countries
Implementation of parameters for Transaction Review
Check the status of counterparties.
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Monitoring operations of the system