You are Treasurer in a Group configuration on a wider geographical scope including « sensitive » countries with regard to the geopolitical context. The last link before the bank remote transmission, your role is key in the payment compliance control process.

Since your Management is criminally liable in the event of non-compliance with regulations, it relies on your business expertise as a « non-compliance detector ». In addition, you are the No. 1 contact for banks who would like to ask you about a transaction, and ask you to document it if necessary.

So your missions are multiple! Knowing your customer before doing business with him, stopping a payment before it is presented to the bank if you deem it non-compliant, so many checks that guarantee, in addition to a positive image of the company, and its legal and financial security, the certainty of not trading with « bandits » ….

At the heart of a network of transactions for the benefit of natural or legal persons, potentially carrying a risk, the Treasurer can anticipate the non-compliance of financial flows. Let’s do a check in !

1. Do you master the whole process?

The treasurer must have a positive answer to these five questions if he thinks he has complete control over the compliance of his payments. Take the test!

Quiz

1. Am I sure that my bank flows do not concern people who have been sanctioned and posted recently on « black » lists of which I was not aware beforehand?
2. Am I able to aggregate different types of lists with different format structures? (For example the lists of the US Treasury and that of the EU commission)
3. Is it possible to log these blacklists to justify, in case of control, the active lists at the time of the transaction?
4. Is my payment risk assessment calculated with scoring from multi-criteria data? Do I have an overview of my risk exposure?
5. Are my signatories able to automatically detect suspicious payments  before  they are issued at the bank? (Abnormal frequency, unusual amount, time of entry, non-compliant currency/country, etc.)

2. Your external compliance

Comply with embargo and asset freeze regulations

French anti-corruption legislation has been extensively expanded in recent years. On the one hand,  the Sapin 2 law  – today extended to companies with more than 500 employees generating more than 100 million euros in turnover – and, on the other hand, the Fight against Money Laundering and the Financing of Terrorism (LCB-FT). ( Ordinance No. 2016-1635 of December 1, 2016 )

To this end, companies with an international dimension must show particular vigilance. Be aware of national laws and regulations, and also integrate extraterritoriality rules.

Fight against fraud: why prevention is better than cure? Discover the richness of the anti-fraud module that changes the lives of signatories of payments!

TRACFIN at the heart of information

In France, TRACFIN (French unit for the fight against money laundering and the financing of terrorism) centralizes information. It collects suspicious transaction reports issued by financial professionals in order to enrich its database. During his press conference last November, the Director of Tracfin, Bruno Dalles, insisted on “  the importance of maintaining strong vigilance against the financing of terrorism . In  the latest money laundering  and terrorist financing risk analysis report , in 2017 the Service processed 1,379 reports relating to suspicions of terrorist financing. That is an increase of 17% compared to 2016.

Blocking by a bank

These statements are confidential and issued by banking organizations. The latter have the duty and the ability to continuously monitor corporate banking communications. Needless to recall that the blocking of a flow of payment by a bank reveals a risky situation which can implicate the company and its managers on a criminal level.

Beyond this questioning, no company wishes to participate without its knowledge in money laundering operations or financing terrorism.

It is therefore essential to control, upstream, its payments and receipts in order to ensure the compliance of its commercial and financial flows.

3. Do you know your customer?

Initiated in the United States, the Know Your Customer process is used by companies around the world. This involves ensuring client compliance with anti-corruption legislation, and verifying their probity and integrity. Its purpose is to prevent identity theft, financial fraud, money laundering and the financing of terrorism.

These KYC processes are done by:

• Data collection and analysis,
• Verification of the presence on the lists (like that of politically exposed persons),
• Behavioral and transactional analysis, etc.

On October 1, 2018, the decree of April 18, 2018 entered into force   . It aims to strengthen the French system for combating money laundering and the financing of terrorism, through even better knowledge of the customer.

To do this, French compliance services are incurring ever-increasing financial and human costs. The idea of ​​pooling information on KYC, AML incidents and fraud, open to all banks, FinTechs and insurance companies is gaining ground. Indeed, this would reduce costs and pool information. SWIFT offers the  KYC REGISTRY . It allows financial institutions to exchange know-your-customer information in a simple and secure way. Thus, the aim is to increase transparency, while eliminating the exchange of costly and superfluous documents.

4. Your banking communication under geopolitical influence

SWIFTNet

The SWIFTNet network, originally exclusively banking, also offers its offers to companies, which can thus communicate with all the banks connected. Security is reinforced, thanks to the authentication of the sender client. Here the political regulation of countries comes into play. For example, the last American sanctions of November 2018, aimed at  disconnecting Iran from the Swift international banking circuit , were hailed by the Israeli Prime Minister as « a historic day ». This last fact is a good illustration of the geopolitical dimension, which goes beyond simply knowing the end customer.

We have secured and harmonized the payment processes of the whole group with a common validation workflow thanks to Payment Factory.

Vincent Millet,

LISI Group Treasurer

Finding the right balance in risk taking

The banks’ very cautious interpretation of embargoes and international sanctions aims to stay within the framework of the law and minimize their risk taking. However, it must not become an obstacle to the commercial development of French companies.

The treasurer, on the strength of all his investigations and information gathering, will ultimately measure the impact of legal and financial risk-taking. He will decide whether or not to open a client’s account. Whether or not to pursue collaboration with a suspicious economic operator.

« In my job, I have always tried to set up treasury software and review the signature policy. You have to find the right balance between efficiency and security. It’s about choosing the « right » number of signatories without weighing down the system, decide whether the signatures are centralized or not. If the objective is indeed to secure payments to ward off fraud, we must not lose efficiency on a daily basis » . Clément Letourneux, Director of Financing and Treasury in their exchange on fraud with David Brault, Associate Director of Objectif Cash.

The checks prior to the acceptance of a new partner in the company’s ecosystem require the implementation of regulatory monitoring, and the real-time updating of internal repositories (embargoes, new laws or legal restrictions, lists of countries at risk, lists of people at risk, etc. to disseminate this knowledge within the company.

• The difficult exercise of updating the sanctions lists

While country and currency controls are relatively simple, they can be much more complex with regard to legal or natural persons subject to sanctions. Indeed, it is necessary to work on up-to-date lists, and not on purchased lists which quickly become obsolete.

Financial flow control can be cumbersome and tedious if done manually. Especially if the volume of data to be processed is large, on a multi-country, multi-currency, multi-third perimeter.

Only real-time indexing from a multi-source database can guarantee a valid result.

Set up an effective and automated monitoring program!

Source: DAF MAG