International Trade Organizations Release Additional Compliance Guidance for Trade Transactions

March 27, 2019 by Jessica Moore

BAFT, The Wolfsberg Group, and the International Chamber of Commerce (ICC) jointly announced today the publication of appendices to its 2017 Trade Finance Principles guidance document.

International Trade Organizations Release Additional Compliance Guidance for Trade Transactions

BAFT, The Wolfsberg Group, and the International Chamber of Commerce (ICC) jointly announced today the publication of appendices to its 2017 Trade Finance Principles guidance document. The document addresses the due diligence required by global and regional financial institutions of all sizes in the financing of international trade and will now feature information on open account trade and financial institutions’ trade loans.

The appendices provide guidance on the specific application of controls by banks in the context of open account trade transactions and specifically elaborate on receivables purchase techniques as defined by the Global Supply Chain Finance Forum. They also provide guidance on the application of controls by banks in the context of Financial Institutions Trade Loans (FITL), also called Bank-to-Bank Trade Loans.

The publication of this additional guidance is the culmination of more than two years of work undertaken by the organizations and their members.

“The trade industry has been clamoring for more specific guidance on articulating controls for open account trade products,” said Tod Burwell, president and CEO, BAFT. “Finally, a resource has been developed by the leading industry associations working together to provide guidance on payables finance, receivables discounting and bank to bank trade loan products.”

“The trade finance market is rapidly evolving, which means that rules and guidance need to not only keep pace but also anticipate future changes,” Olivier Paul, director of ICC finance for development. “This new update of the Trade Finance Principles does exactly that — providing critical guidance on Open Account and Receivables techniques.”

“In the two years since BAFT, the ICC and the Wolfsberg Group published their last update to the Trade Finance Principles, the working group has not lessened its efforts or enthusiasm, producing very welcome additional guidance on open account trade and the financing of international trade more broadly,” said Tracy Paradise, executive secretary, the Wolfsberg Group. “We trust that those involved in these transactions will find this useful, particularly all aspects of the controls required in this area.”

The updated Trade Finance Principles may be found in the Library of Documents under “Best Practices and Industry Standards”.

About The Wolfsberg Group

The Wolfsberg Group is an association of thirteen global banks which aims to develop frameworks and guidance for the management of FCRs, particularly with respect to Know Your Customer, Anti-Money Laundering and Counter Terrorist Financing policies. The Wolfsberg Group consists of the following financial institutions: Banco Santander, Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, MUFG, Société Générale, Standard Chartered and UBS. https://www.wolfsberg-principles.com/

About The International Chamber of Commerce (ICC)
The International Chamber of Commerce (ICC) is the world’s largest business organization representing more than 45 million companies in over 100 countries. ICC’s core mission is to make business work for everyone, every day, everywhere. Through a unique mix of advocacy, solutions and standard setting, we promote international trade, responsible business conduct and a global approach to regulation, in addition to providing market-leading dispute resolution services. Our members include many of the world’s leading companies, SMEs, business associations and local chambers of commerce.www.iccwbo.org

About BAFT
BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages on a wide range of topics affecting transaction banking, including trade finance, payments, and compliance. The association website is www.baft.org

March 20, 2019 by Jessica Moore

On March 13, BAFT joined eight other financial services trade associations in submitting a letter to the House Financial Services Committee leaders highlighting the need for a national beneficial ownership registry.

While banks are required to collect the beneficial ownership information of their customers, the associations noted that the lack of a single, centralized federal registry for verification of that information “represents a significant gap in the U.S. regulatory system that allows criminals, money launderers, kleptocrats and terrorist financiers to obscure their identities from law enforcement.”

The letter urged lawmakers to pursue reforms to the current anti-money laundering framework that would result in greater clarity and simplicity for banks. Specifically, the associations called for reforms that would better align the examination and compliance framework with national AML/CFT priorities; facilitate information sharing between financial institutions and law enforcement; update and streamline reporting requirements; and encourage the use of technology to support AML efforts.

The letter may be found under the Comment Letters in the Documents Library.

March 4, 2019 by Jessica Moore

A guidance paper for users of correspondent banking services

WASHINGTON — BAFT, the leading global trade association for transaction banking, today released the Respondent’s Playbook for Obtaining and Maintaining a Correspondent Banking Relationship, a guidance document for users of correspondent banking services. The Playbook outlines the decision making process of correspondents establishing new and reviewing existing relationships and the measures that respondents may take to increase the likelihood of a favorable outcome.

The Playbook is part of BAFT’s effort to address the significant decline of correspondent banking relationships worldwide since 2011. “The playbook is a realistic window into actively managing de-risking,” said Tod Burwell, president and CEO of BAFT. “It discusses the three major divers in a correspondent’s decision process when considering a new or reviewing an existing relationship, and empowers a respondent to improve its circumstances by adopting certain best practices.”

To develop the playbook, BAFT convened a core working group of global correspondent banks and one industry body representing the largest global correspondent banks. Business as well as compliance representatives participated in the project to ensure a comprehensive and balanced perspective.

“BAFT designed the playbook to help respondents – including banks, money services businesses, and fintech companies – better understand the legitimate expectations of correspondents,” remarked Samantha Pelosi, SVP, Payments & Innovation of BAFT and the primary author of the playbook. “BAFT vetted the best practices with a group of respondent banks to confirm their reasonableness and feasibility. The playbook also contains answers to questions frequently asked by respondents.”

BAFT plans to offer two-day instructor-led courses in jurisdictions most impacted by the decline in correspondent banking relationships. The training will explore the content of the playbook, placing special emphasis on the best practices through the provision of additional detail, evaluation of recommended procedural, technological, and policy solutions, and the presentation of case studies. Contact BAFT’s Project Management Office to request training for your organization and/or its members.

The Respondents Playbook is free of charge for BAFT members and available for purchase for non-members. Playbook may be found here.

After completing the check-out for this product, please proceed to My Downloads located in the top right corner or your scree to access the PDF.

February 22, 2019 by Jessica Moore

The European Commission today issued its own list of 23 jurisdictions today that it said have “strategic deficiencies” in their anti-money laundering and counter-terrorist financing frameworks.

The European Commission today issued its own list of 23 jurisdictions today that it said have “strategic deficiencies” in their anti-money laundering and counter-terrorist financing frameworks. The list — developed separately from the list of 12 countries maintained by the international Financial Action Task Force, which is the globally recognized body for assessing AML/CFT standards — includes four U.S. territories: American Samoa, Guam, Puerto Rico and the U.S. Virgin Islands.

The Treasury Department immediately expressed its strong concern about the inclusion of U.S. territories on the list. “The commitments and actions of the United States in implementing the FATF standards extend to all U.S. territories,” the department said. “The same AML/CFT legal framework that applies to the continental United States also generally applies to U.S. territories.” Treasury emphasized that the European Commission’s process for identifying these jurisdictions was far less robust than FATF’s methodology.

The commission said its list was developed under stricter EU criteria that took effect last summer. While Treasury said that it “does not expect U.S financial institutions to take the European Commission’s list into account in their AML/CFT policies and procedures,” ABA is concerned that the EU list may pose difficulty for EU-based banks or U.S.-based banks with EU operations that operate in or have correspondent relationships with banks in the listed territories. The association will monitor the issue closely.

View the EU list.
Read the Treasury statement.
For more information, contact Samantha Pelosi.

January 23, 2019 by Jessica Moore

IIFM and BAFT announced the release of their joint initiative of creating global master participation agreements to support the development of Islamic trade finance business.

IIFM and BAFT Publish MPA’s for Islamic Trade Finance

WASHINGTON — IIFM (International Islamic Financial Market) and BAFT (Bankers Association for Finance & Trade), announced the release of their joint initiative of creating global master participation agreements to support the development of Islamic trade finance business.

The IIFM-BAFT Master Participation Agreements (IIFM-BAFT MPA’s) consist of two separate standardized framework documentation to cater for Shari’ah-compliant Unfunded and Funded participation arrangements for trade finance transactions. The master agreements are supplemented by a Structure Memorandum and an Operational Guidance Memorandum to provide better understanding on use of the documentation from Shari’ah, legal and operational aspects. In addition, there are separate Shari‘ah pronouncement for each MPA standard.

“Trade finance plays an important role in the global financial system, and for Islamic finance it presents a huge opportunity which the market participants must avail,” said Khalid Hamad, chairman of IIFM. “The IIFM-BAFT Master Participation Agreements, like previous IIFM standards, will provide greater transparency, cost and time efficiency, legal certainty as well as Shari’ah harmonization which in turn will contribute in creating more active Islamic trade finance business.”

“Islamic trade has become an important transaction stream in many markets,” said Tod Burwell, president and CEO of BAFT. “By standardizing the framework for Shari’ah-compliant participation arrangements relating to trade, we hope that transaction execution will become easier and trade will continue to facilitate economic growth in these markets.”

“The IIFM-BAFT MPAs are developed based on a comprehensive industry consultation process under the guidance of the IIFM Shari’ah Board,” said Ijlal Ahmed Alvi, CEO of IIFM. “The MPAs provide the market participants with a robust and ready-to-use documentation. This is yet another major accomplishment for the Islamic finance industry, and going forward IIFM will aim to tackle other pressing issues relating to trade finance including Islamic trade finance products as part of the MPA’s development.”

IIFM and BAFT acknowledge the support of The Waqf Fund (Bahrain) for providing financial assistance grant in the development of these important standard documentations which is helping in the sustainable development of Islamic finance industry.

The templates may be found here

About IIFM
IIFM is established under Royal Decree (23) Year 2002 of the Kingdom of Bahrain as a neutral and non-profit standard setting organization that has been mandated to develop Shari’ah-compliant financial documentation and product confirmation Standards for the Islamic Financial Services Industry. IIFM’s other services include organizing specialized industry awareness seminars, technical workshops and industry consultative meetings as well as publishing research papers and an annual Global Sukuk Report. The organization’s website is www.iifm.net

January 14, 2019 by Jessica Moore

BAFT announced its Future Leaders program class of 2019. The program – now in its fourth year – recognizes upcoming leaders in the transaction banking industry.

BAFT Announces Future Leaders Program Class of 2019

WASHINGTON – BAFT, an international financial services association, announced today its Future Leaders program class of 2019. The program – now in its fourth year – recognizes upcoming leaders in the transaction banking industry.

Nominated by their respective institutions, the class of 2019 includes 32 individuals from 14 countries and a variety of disciplines within transaction banking. This year’s group will be divided into four project teams to address current industry issues such as the future correspondent banking, the role of humans in transaction banking, trade dynamics, and building collaboration between global transaction banking.

“The Future Leaders program continues to grow in prestige and significance within the transaction banking industry thanks to the achievements of its graduates,” said Tod Burwell, president and CEO of BAFT. “Over the last four years, they’ve taken on leadership roles and advanced important industry issues both within their own organizations and BAFT, and I’m confident the class of 2019 will continue that tradition.”

The class of 2019 will begin the program at the annual BAFT Europe Bank to Bank Forum in London, and will conclude in April at the BAFT Global Annual Meeting – The Americas in California. Several future leader council members will support the current class as mentors, joining BAFT board members who will again serve as project sponsors.

BAFT congratulates the following individuals who were selected to this year’s program:

Arezu Abedinzadeh, SEB
Abdul Aleem, ITFC
Rami AlHusari, Arab Bank
Media Alimorad, Bank of Montreal
Sylvie Bartelmaos, Banque Libano-Francaise
Michael Beispel, Standard Chartered Bank
Josephine Bergman, Swedbank AB
Michael Boede, MUFG
Jennifer Couch, PrimeRevenue, Inc.
Ryan Dalrymple, US Bank NA
Matthew Giannotti, NatWest
Anthony Guide, PNC Bank NA
Guus Huijgen, Deutsche Bank AG
Kerry Jordan, CIBC FirstCaribbean
Annina Keller, Credit Suisse
René Klose, Commerzbank
Luke Kneeshaw, Columbia Bank
Ryan Knoll, BNY Mellon
Donald Monson, Deloitte LLP
Katherine Mueller, INTL FCStone
Rodrigue Nakindavyi, Danske Bank
Mohammad Osman, J.P. Morgan
Sureen Pannagas, Société Générale
Abhijit Patil, State Bank of India
Silvio Pestalozzi, UBS Switzerland AG
Joshua Quigley, Bank of America Merrill Lynch
Chanpreet Sawhney, Wells Fargo Bank
Saurabh Sharma, Abu Dhabi Commercial Bank
Gert Sonck, ING Bank NV
George Stergianopoulos, HSBC Bank
Anton Suphal, RBC Investor & Treasury Services
Anthony Williams, Scotiabank

Learn more about BAFTs Future Leader Program here

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