Manipulation and risk in global trade is by no means a new phenomenon. However, in recent years, the threat it presents to organisations carrying out legitimate transactions has seen it rise up the boardroom agenda and become a talking point at virtually every industry conference where international banks are present. In particular, banks and regulatory authorities are looking for ways to reduce exposure to risk, including better reporting on transactions that are subject to letters of indemnity (LOIs). The challenge they face comes in ensuring that all the proper checks are carried out in accordance with regulation, without slowing down or disrupting key transactions and processes. In 2013, a thematic review by the Financial Conduct Authority (FCA) into the control of financial crime risks in trade finance highlighted concern for processes both in the UK and internationally. One important area related to the authenticity and originality of the key documents needed to conduct transactions. In this respect, replacing paper-based processes with digitised documents offers real value. Specifically, if a bank or other trading counterparties switch from sending key documents manually to using an electronic process (i.e. over a multi-party trade finance platform), there is far less risk of these documents […]
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