Policy News

Updated FinCEN Final Beneficial Ownership Reporting Rule

On September 29, FinCEN issued a final rule implementing the bipartisan Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting provisions. This rule will strengthen the integrity of the U.S. financial system by making it harder for illicit actors to use shell companies to launder their money or hide assets. The rule describes:

who must file a BOI report
what information must be reported, and
when a report is due

Specifically, the rule requires reporting companies to file reports with FinCEN that identify two categories of individuals: (1) the beneficial owners of the entity; and (2) the company applicants of the entity. According to FinCEN, the rule aims to minimize burdens on small businesses and other reporting companies but to help, FinCEN will develop compliance and guidance documents to assist reporting companies. Two other rules, covering access to the database and an update to the existing CDD rule, are still pending.

BAFT Comments to UNCITRAL on Guidelines for International Identity Management

At the end of April 2022, the United Nations Commission on International Trade Law (UNCITRAL) released their “Draft Model Law on the Use of Cross-border Recognition of Identity Management (IdM) and Trust Services“. BAFT received a Request for Comment, with a May 27, 2022 submission deadline.

BAFT Endorses UNCITRAL’s Efforts

The need for the establishment of the IdM cuts across numerous facets of international transaction banking including trade finance, supply chain finance, payments, and areas of compliance such as Know Your Customer (KYC) and Anti-Money Laundering (AML). The process of establishing standards in the universal acceptability of the IdM is also at the core of the digitization of trade initiatives. Accordingly, BAFT fully endorses UNCITRAL’s efforts in formulation of the Draft Model Law.

The Draft Model Law confirms that the international dimension is essential to the use of identity management and trust services and more generally, of electronic services. However, the text confirms that there are two obstacles: i) technical incompatibility leading to a lack of interoperability, and ii) legal obstacles to cross boarder recognition.

BAFT Advocates for GLEIF’s LEI

To provide direction on overcoming these two obstacles, BAFT advocates for the implementation of the work already done by the Global Legal Entity Identifier Foundation (GLEIF) in the establishment of the Legal Entity Identifier (LEI). The LEI is a global ISO 17442 standard that connects key reference information and enables clear and unique identification of legal entities.

Digital transformation in global transaction banking is capable of reducing costs, improving efficiency, better regulatory control with less risk and collaborative opportunities for stakeholders in the global economy. The LEI is the only global standard for legal identity identification which is why BAFT has endorsed its inclusion in the Draft Model Law.

Read the Full Comment Letter Here >

BAFT Comments on FASB and IASB Proposed Amendments to Accounting Standards for SCF Programs

In Q4 2021 the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) released proposed amendments to their accounting standards that will require buyers of goods/services who use supplier finance programs/arrangements in respect of their payables to disclose key terms of those supplier finance programs in their financial statements.

The purpose of the proposals is therefore to enable investors, creditors, and other stakeholders in respect of a buyer to assess the effects of supplier finance programs on such buyer’s liabilities and cash flows by requiring a buyer to provide both quantitative and qualitative disclosures regarding its use of supplier finance programs. Both FASB and IASB do make clear in their proposals though that the proposals will not deal with how a payable which forms part of a supplier finance program should be characterized on the balance sheet of a buyer.

BAFT, through the collaborative efforts of members of BAFT’s Supply Chain Finance Working Group, was invited by FASB and IASB to provide comment letters in response to their respective proposals.

BAFT strongly supports the goal to achieve increased transparency in the reporting of Supplier Finance Arrangements. However, we also believe that fostering increased understanding of supply chain finance, its benefits, and how it can be best used in line with standard market practice is crucial to achieving this goal.

BAFT Introduces Economic Sanctions Resources Hub

BAFT’s Economic Sanctions Resources Hub is a collection of links and documents to various resources across numerous international jurisdictions that can help you and your organization manage economic sanctions impacting the global transaction banking industry.

BAFT is committed to providing details on economic sanctions and export controls enacted by the European Union (EU), the United Kingdom (UK), the United States (U.S.), and other international jurisdictions in response to Russia’s violations of international law and the territorial integrity of Ukraine. We are also providing details on economic sanctions and export controls enacted by the EU, Japan, the UK, and the U.S. in response to Belarus’ role in the invasion of Ukraine.

The Economic Sanctions Resources Hub features industry statements on Russian sanctions from credit card and payments processers including SWIFT, international development and trade organizations including the EBRD, the ICC, the IMF, and the World Bank Group; in addition to jurisdictional resources on Russian sanctions from Australia, Canada, the EU, Iceland, Israel, Japan, Liechtenstein, New Zealand, Norway, Singapore, South Korea, Switzerland, the UK, and the U.S.

We encourage members to actively monitor this resource hub as sanctions could change on a frequent basis, and we will endeavor to keep our community updated on changes that impact our industry.

As you review the sanctions and export controls we encourage you to send your questions and items for clarification to [email protected]. We will consolidate member questions and engage with the Office of Foreign Assets Control (OFAC) on behalf of the industry.

BAFT Comments on ICC Standards for Sustainable Trade Finance

The BAFT Sustainability Working Group welcomed the International Chamber of Commerce’s (ICC) Standards for Sustainable Trade & Sustainable Trade Finance positioning paper published in November 2021. The roadmap is a positive development and moves the industry closer to agreement on a common standard that the industry can reference.

As a common standard begins to take shape, BAFT offers recommendation on how to strengthen the ICC’s proposal in order to ensure broad industry support and wide adoption.

The working group highlights several elements in its comments; first prioritizing equal weight to all elements of ESG beyond the environmental factor; second, acknowledging that standards must not only recognize positive activity, but also guide those involved towards what best practices or even minimum acceptable standards; and lastly, underpinning the development of any standard care must be take to be inclusive of the global nature of the business.

For a global sustainability standard to take hold, geographically diverse stakeholders must be an integral part of the development and adoption. Download the comment letter to read our latest recommendations, clarifications, and comments regarding sustainable finance and the ICC’s positioning.

BAFT Updates English Law and New York Law Master Participation Agreements (MPAs) with LIBOR Amendments

With the cessation of LIBOR and the transition to alternative reference rates, BAFT has prepared amendment agreements to the English Law and New York Law Master Participation Agreements (MPAs).

WASHINGTON — As the trade finance industry prepares for the cessation of LIBOR and the transition to alternative reference rates, BAFT together with ITFA and Sullivan & Worcester have prepared amendment agreements to the 2008 (English Law), 2010 (New York Law), 2018 (English Law) and 2019 (New York Law) Master Participation Agreements (MPAs). Access the new amendment agreements here.

“The suite of MPAs are industry standard documents that are used by banks and their counterparties around the globe to facilitate the buying and selling of country and bank trade-related assets.” said Tod Burwell, President & CEO of BAFT, “Updating the widely used MPAs is an important element for trade finance to swiftly transition to alternative reference rates.”

“The LIBOR transition touches multiple areas of trade finance not least distribution. Producing a simple and commercially rational solution for one of the most widely used documents in distribution, the MPA, was therefore crucial. I am therefore very pleased that the two associations, BAFT and ITFA, working with law firm Sullivan & Worcester were able to produce this timely document.” said Sean Edwards, Chairman of ITFA.

The amendment agreements can be used to make the changes to existing MPAs as well as for new agreements. The approach taken is to replace the references to LIBOR by references to relevant central bank rates for those currencies for which LIBOR is currently quoted. The changes only deal with LIBOR replacement and not with any other issues or developments since each MPA was published e.g. bail-in.

Geoffrey Wynne, Partner & Head of Trade and Export Finance Group at Sullivan & Worcester said, “With the direction of those involved at BAFT and ITFA we have provided a pragmatic solution covering how to change all the existing BAFT MPAs where new ones are entered into, and Amendment Agreements to amend the existing ones where they are continuing. We hope market participants will find these useful.”

It is important to note that the amendment agreements do not amend the rate in any participated transactions and only in the MPA itself. Participated transactions can use a variety of rates, as specified in an offer. For those wishing to enter into fresh agreements reflecting the changes and for new MPAs in the future, updated versions of the various BAFT MPAs are available for members and non-members here.

BAFT Media Contact:
Blair Bernstein
Director, Public Relations
[email protected]
+ 1 (202) 663-5468

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