Five ways for banks to beef up their sanctions and AML compliance

Banks, which face the challenge of complying with sanctions, anti-money laundering (AML) regulations and the know-your-customer (KYC) regime, have been offered five tips on improving their processes for trade finance by Accuity.

The risk and compliance software provider is among those attending the Global Trade Review (GTR) Middle East/North Africa (MENA) trade finance week 2016, which has returned to Dubai for its 13th year.

Noting the recent lifting of trade sanctions on Iran, Henry Balani, head of innovation at Accuity, said: “Today, corporates and financial institutions are struggling to cope with ever expanding compliance programmes to satisfy all aspects of their AML policies. It is even more challenging with the emergence of this complex trade-based money laundering phenomenon.”

In Accuity’s view, the top five ways that banks can improve their sanctions compliance and AML processes for trade finance are:
1. Ensure your screening process captures dual-use goods: Banks need to be more vigilant about whether goods or raw materials can be used for military purposes.
2. Assess your KYC counterparty risks: Bank risk profiles may change and conducting the appropriate due diligence is critical.
3. Ensure your compliance processes are consistent: Regulators are keen to ensure that banks follow a comprehensive and repeatable process when it comes to screening trade transactions.
4. Leverage the appropriate mix of technology and people: Over-reliance on any component leads to inefficiencies in the process.
5. Ensure you understand which regulatory bodies you must comply with: There is a difference between global regulators as to which Iranian entities are no longer sanctioned which can create confusion.

The Financial Times reported this week that hopes for Iran’s economy would quickly open up to foreign trade and investment after the easing of international sanctions have been disappointed by continuing restrictions on financing businesses in the Islamic republic.

Iranian state-related bodies, backed by billions of dollars in unfrozen assets, have swiftly responded to the lifting of most sanctions, but smaller traders and investors continue to have difficulty securing finance to develop their operations, says the FT.

Iranian and US bankers in the region report that some US clearing banks have warned banks in Europe, Asia and the Middle East that their US-based dollar accounts will face close scrutiny if they do business with Iran.


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