Two-thirds of banks, corporations and non-banking financial institutions (NBFIs) still use search engines to comply with trade and export compliance regulations, said Accuity recently when releasing results of a survey.
The trade compliance survey – conducted by Accuity during the first half of 2021 – questioned more than 120 professionals from leading banks, insurance and fintech organisations operating in APAC, EMEA and the Americas, according to the risk solution provider.
Manual search leaves organisations open to missing red flags and making misinformed decisions over whether to accept business when it comes to trade and export compliance, said the firm, adding that this can expose them to risk and potential regulatory action and may also result in missed opportunities to participate in safe and legitimate trade transactions.
Trade finance providers, as well as insurers, logistics firms and others involved in international supply chains are responsible for conducting due diligence on the parties and items involved in the transactions and shipments they facilitate, Accuity pointed out.
This includes verifying the legitimacy of the customer and all parties to the transaction, checking for dual-use or controlled goods— uch as those that could have a military purpose—and ensuring funds and goods are not going to or coming from a sanctioned location, the firm added.
Trade compliance is not always handled by a dedicated team: Banks are managing trade compliance mostly through a dedicated compliance function. Non-banking financial institutions (NBFIs) are handling it as part of the KYC process and corporations as part of a central compliance function or general operational team.
Multi-variable screening is mostly limited to banks: More than 90% of banks screen for five or more data points, including sanctions, goods, vessel names and ultimate beneficial owners (UBOs), compared to only a third of non-banks.
Challenges posed by changing regulation: The biggest challenges for banks and corporations are keeping up with rapidly changing regulations and increasing expectations, while NBFIs find document-heavy processes the biggest burden.
Efficiency gains planned: Sixty percent of firms revealed that they plan to invest in the integration/interconnectivity of systems, with 74% looking to improve data sharing and transparency.
Compliance as an advantage: Competitive advantage is seen as the main benefit of trade compliance. Corporations reported less concern over fines, while prioritising improving the flow of business through smarter licence management.