treasuryXL is the community platform for everyone with a treasury question or answer! treasuryXL expert Zhanna Irgaliyeva is more often asked what you can do about fraud caused by BEC. Today she will tell us a few tools to prevent BEC scams for your treasury department.
Question:“How to prevent fraud caused by BEC for my treasury department?”
Answer provided by Zhanna Irgaliyeva
What are BEC scams?
A BEC fraud or scam, or “Business Email Compromise” scam, is a type of cybercrime that involves tricking and defrauding individuals or businesses into transferring money or sensitive information through fraudulent emails. The compromise of business emails is a significant and spreading issue that affects businesses of all sizes and in every sector worldwide. Organizations have been exposed to potential losses in the billions of dollars due to BEC schemes. BEC scams are everywhere and they never go away.
What would you recommend to prevent fraud caused by BEC scams?
There are a few tools I recommend you to use to prevent BEC scams. First, it would be smart to rewrite the company’s policy and procedures to include internal controls to reduce fraud. You could verify new or updated beneficiary data not via email, but via a Main Agreement or Change Orde. Another option is separation of duties through the use of two-factor authentication.
Also, make sure to train your staff on the different types of BEC fraud and familiarize them with updated internal controls to mitigate the risk of fraud. Then, secure your email, and regularly update the required antivirus software. Daily reconciliation of company’s accounts would also be smart to do for early identification of BEC scams. Finally, always stay alert with everyday payment transactions as BEC scam can pop up just like that.
Zhanna Irgaliyeva
Reference: Association of Financial Professionals
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Je ambieert een functie als financieel directeur van een grotere (internationale) MKB-onderneming of non-profitorganisatie. Maar hoe word je financieel directeur? Die vraag staat centraal in de training Treasury Management. Tijdens vier masterclasses verdiep je je in de belangrijkste onderdelen van treasury management: corporate finance, cash management, valuta- en rentemanagement. Na de training ben je klaar om je ambitie waar te maken.
Je bent nu controller, accountant, financieel adviseur, cash manager of bankier en hebt minimaal drie jaar werkervaring. Jouw kennis uit het financiële bedrijfsleven vullen we aan met alle ins en outs van treasury management. Je start in het voorjaar en sluit de training na de zomer af met een opdracht uit je eigen praktijk. Ook doe je mee aan een treasury management game.
Tijdens de opleiding Treasury Management richt je je op veel praktische vraagstukken. Je houdt je bezig met bankrelatiemanagement, (alternatieve) financieringsmodellen, rentederivaten, rapportages, internationaal zakendoen en meer. Allemaal met maar één doel: ervoor zorgen dat jij je verder professionaliseert, zodat je klaar bent voor die (internationale) topbaan.
Toelating
Om toegelaten te worden tot de cursus Treasury Management moet je een hbo-diploma hebben, net als minimaal drie jaar relevante werkervaring.
Tijdens een adviesgesprek kijken we samen of de opleiding aansluit bij je ambitie én of jij past bij de opleiding. Door de interactieve colleges leer je van elkaar, dus de samenstelling van de groep is van belang. Gestreefd wordt naar een diverse groep deelnemers uit verschillende sectoren van het bedrijfsleven en de non-profit sector.
treasuryXL is the community platform for everyone with a treasury question or answer! Today, we discuss a question that treasuryXL expert Vasu Reddy often hears within his treasury network. The question relates to challenges for Treasury in Emerging Markets that most corporates continue to experience.
Question:“How can I efficiently and cost-effectively get central bank approval/advice for cross-border flows in cash-strapped countries without delaying my business?”
“This is a common question I receive. It is related to emerging market challenges for treasury that most corporates still experience. Examples of these emerging markets include Brazil, Russia, India, China and South Africa (BRICS)
My idea is to proactively submit an application in advance. This application should indicate the nature and scope of the transaction, the benefits to the company, and the impact on the country (including currency and cash implications). Furthermore, it should include the reasons for not sourcing locally, the basis for the costing, and supporting documents such as supplier agreements, shipping documents, etc.
If it is a recurring remittance, such as royalties or monthly Global service charges, then a special dispensation should be applied for (renewed annually) to avoid individual applications resulting in increased costs, efforts and delays.
The best approach is to work closely with your authorized dealer, who is your main partner bank and who has strong links with the Central Bank, has automated systems and is fully aware of regulatory changes. ”
Vasu Reddy
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Welcome to the second edition of this newsletter where we discuss the latest treasuryXL poll on current issues in corporate treasury. We will take you through what treasurers think about a current topic by their votes, and a couple of treasury experts will explain their views on the subject. In this edition, we discuss what treasurers should do first to control against sharp increases in interest rates.
In last month’s poll, we discussed the impact of the recent interest rate increases on treasury. The poll received 35 votes, the results can be found in the image below.
We clearly notice that the majority of the treasurers are of the opinion that the first thing to do to control sharp interest increases is to reconsider the investment strategy of excess cash. We asked a number of treasury experts to explain why they voted for the other options than for a reconsideration of the investment strategy.
Niki voted for the option to move excess cash to USD.
“Place excess cash in USD requires a holistic approach, the right time and knowledge, but if applied correctly, will manage your cash like a pro”
Treasurers want to manage certain risks, and often there is a silo approach. Liquidity risk is managed with loans and deposits, Interest risk (and returns) are managed with products such as interest rate swaps and FX is managed with FX spot, forwards and swaps. Once the incoming data (think bank balances, forecasts, markets rates) is structured, the data becomes information and is sufficient to act as treasurer with clear objectives (these are often defined in the above silos).
The next step would be to validate whether the approach meets the objectives. So, far nothing to worry about….until the market exhibits unexpected behavior. For example, a disconnect between FX swap points and underlying interest rate differentials (Jan 2015 USDCHF as a reference), or perhaps a need to optimize interest rates. In this case (and when provided time and knowledge is available), a holistic approach to FX, interest rates and cash can provide the opportunity to place excess cash in a higher-yielding currency without adding FX risk to your portfolio.
In short, it may make sense to place excess cash in USD if it does not shift FX risk or if this shift is managed by FX swaps and the pricing between swaps and deposits is compared. Again, this requires a holistic approach, the right time and knowledge, but if applied correctly, will manage your cash like a pro.
Some considerations may be to look at the efficiency of FX swaps versus deposits, as FX swaps tend to be more efficient, automation of solutions, and tracking and identifying market behavior.
Jeremy voted for the option to choose something else.
“Analyze how your company is exposed to the economic cycle ”
First, analyze how your company is exposed to the economic cycle – a study I saw in the early 2000s showed that the best position for airlines was to be 100% floatig, because their business was effectively in lockstep with the business cycle.
In theory, when an entity is part of an industry that is closely aligned with the economic cycle, it has a natural hedge for its interest rate exposure, in that it can afford to pay higher interest rates when the economy is booming, and get some relief from lower interest rates when the economy is slowing. The study I’m referring to involved a major German airline; at the time, the airline’s funding was 80% fixed, and their comments at the time were not very favorable to switching to such a large floating exposure. Fast forward 15 years, or so, and I checked their Financials. They were 85% floating at the time, so they had clearly stepped into the results of the study.
The biggest risk for them would be an extended period of Stagflation, so I hope they do well in the current circumstances!
Vincenzo voted for the option to move excess cash to USD.
“My view here is that a treasurer should take a conservative approach”
Macro themes continue to drive financial markets. One does not have to look much further than the inverted US yield curve or the collapse in copper to understand that investors continue to re-price global growth prospects lower.
This is possibly because: (a) European activity is more exposed to the Russian energy supply shock and b) the U.S. economy has entered this global tightening cycle with more momentum and a positive output gap.
Inverted yield curves are typically bad news for pro-growth currencies (commodity exporters + Europe & Asia ex-Japan) and typically good news for the dollar, the Japanese yen, and the Swiss franc. This environment looks set to continue over the summer months as the Fed continues its tightening policy.
Recall that the German Bundesbank estimated that the Germany economy could take a 5% GDP hit if gas is rationed. It now appears that we are now not far from such a scenario. The pressure on European growth has caused the Eurostoxx benchmark equity index to fall 22% year-to-date, versus -20% for the S&P 500. The question will be how much more the ECB can tighten before the growth valves come down.
My view here is that a treasurer should take a conservative approach and assume that there are no large loans to be repaid to the banks, existing cash in excess should be moved to USD or to CHF or to JPY at least until the end of this year.
Sooner or later, Ukraine and Russia war will come to an end, so the cycle will reverse and EUR will become more attractive for investors and for treasurers.
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“That is a question I think is very relevant right now, especially after Covid. Firstly, let me look back at trade finance over the past few years. In 2019 and 2020, trade finance came under scrutiny following a number of high-profile defaults, suspected frauds and double financings and, in some cases, the failure to provide proper collateral for goods.
While legislation to recognize electronic trade documents will not bring about an overnight change in financier confidence, it is likely to do so in the medium term.
A game-changer for digital trade
The availability of fully enforceable electronic trade documents recognized by the most widely used trade jurisdiction will in itself have a major impact on the approach of both companies and financiers towards digital trading solutions.
Transferable records, such as bills of lading, are the most important commercial documents in trade and currently, less than 1% of bills of lading are in electronic form. This is a huge missed opportunity, given that electronic transferable records will make trade safer, paperless, easier, cheaper, faster, and greener for companies.
Implications for the security in trade transactions and regulatory treatment of trade finance: URDTT
The Uniform Rules for Digital Trade Transactions (URDTT) version 1.0 are the result of the mandate given by the ICC (International Chamber of Commerce, Paris) Banking Commission to develop a high-level structure of rules, obligations, and standards for the digitalization of trade transactions.
The ICC Uniform Rules for Digital Trade Transactions (URDTT) are intended:
1. For a fully digital environment;
2. To be neutral with regard to technology and messaging standards; and,
3. To extend into the corporate space, including commercial transactions and the growing community of non-bank providers of financial services.
The URDTT are designed to be compatible with UNCITRAL (United Nations Commission on International Trade Law) Model Laws, including those Electronic Commerce, Electronic Signatures and Electronic Transferable Records.
The rules will serve as an overarching framework for digital trade transactions thereby providing global standardization, consistency and conformity, providing a collective understanding of terms and definitions, whilst promoting and supporting the usage of electronic records/documents/data.
Various technology service providers have already publicly stated their intention to work with the URDTT, in fact, a number have already incorporated the URDTT into their platform rulebooks and are actively looking at developing trade products based upon the URDTT.
Conclusions
Trade finance functions that adopt appropriately targeted automation and advanced analytics as integral parts of their compliance operations will be more important than ever in this uncertain international environment. With such high volumes of transactions and increasing complexity, efficient trade financing is key to ensuring that warehouses, harbors and supply chains are running smoothly – thus keeping the age-old business of international trade firmly afloat.”
Do you also have a treasury-related question? Feel free to leave your question on our treasuryXL Panel. The panel members are willing to answer your question, free of charge, with no commitment.
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A couple of weeks ago we launched a poll on our LinkedIn page about the impact of crypto volatility on corporate treasury. The poll received 72 votes in total, which is a great number! Thanks to everyone who joined the poll.
It is quite clear that cryptos present a high-risk profile. The volatility is high, and it is not easy to hedge these risks. In addition, payment transactions in cryptos take more time and energy than existing payments systems like the instant payments.
Currently, cryptos are held within the blockchain and are based upon a consensus. As a corporate, you do not have a control over these assets. In addition, you do not have the stringent KYC and AML checks which you have in the classic payment systems. The KYC and AML controls occur only on the moment that an individual or a company buys cryptocurrencies with its bank account or card, or when the proceeds of the sales of cryptocurrencies are paid to their bank account.
For this reason, there is a clear need for more regulation. Although the 5th AML Directive covers certain crypto assets under the term “virtual currencies”, it does not provide a harmonized approach. This problem will be addressed by the proposal of the EU Commission for the Regulation of Markets in Crypto Assets (abbreviated as MiCAR), which aims to create an EU framework for crypto assets falling outside the scope of other existing EU financial regulation and is expected to enter into force by end 2024. Let’s hope that this will bring more clarity in this complex topic.
Rejecting crypto currencies or even blockchain before fully understanding the concept is like holding on tohorse and wagon when seeing the first cars. And current inflation following the QE strategy of the ECB shows that stability is not guaranteed in the traditional system. At the same time, treasurers are there to manage risk and the current crypto landscape seems very risky. So let’s see what will happen.
“Without well thought-out regulation, the inherent volatility of cryptocurrencies will continue to make stablecoins vulnerable to various risks”
Regulation of stablecoins has long been on the agenda of regulators worldwide. To date, however, the crypto sector in general and the stablecoin segment in particular remain largely unregulated.
Stablecoins continue to come under scrutiny from regulators, given the rapid growth of the $130 billion market and its potential to impact the broader financial system. As stablecoins are deemed increasingly important to the system by regulators, with the potential to disrupt payment and settlement transactions.
The recent collapse of stablecoin TerraUSD (UST) and the resulting fall of Bitcoin below the $28.000 level have provided an additional argument for speeding up the regulatory process and coming up with adequate regulatory measures.
With a growing number of traditional financial institutions, investors and also companies entering the Crypto and DeFi market, regulation becomes urgent to prevent such collapses in the future. Buyers need to understand the risks of these algorithmically stablecoins in particular. Therefore, standards are needed.
Without well thought-out regulation, the inherent volatility of cryptocurrencies in general but also of some types of stablecoins, will continue to make these stablecoins vulnerable to various risks, and make using these instruments for treasury purposes a difficult activity. The lack of transparency about what assets are being used and whether they have enough dollars to support all the digital coins in circulation also amplifies this consequence.
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treasuryXL created this eBook based on the most relevant best practices that Treasury experts provided over the last years. We bundled the most important information for you and created easy to read and understand articles about the main subjects within the World of Treasury.
We took a deeper dive into each of the above-mentioned treasury functions and highlight:
The purpose of each named Treasury function (What is?)
What specialists do
Examples of Activities
Summary of Frequently Asked Questions and answers
Conclusion
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The world of Treasury is a complex topic. Many people will think about pirates and big see ships that sank deep into the bottom of the ocean including their ‘treasure’. A mystery treasure map will lead the finder to a treasure worth a lot of money. In some way Treasury and Treasure have similarities, it is about money and other valuables.
Are you having a hard time how to explain what treasury is to family, friends and colleagues? Or are you interested to learn more about the World of Treasury?
treasuryXL created a 41 pages eBook for the corporate treasurers and the world of finance addict.
This eBook is designed to answer layman questions about the function of Treasury. treasuryXL bundled the most important information for you and created an easy to read and understand articles about the main subjects within the World of Treasury:
This ebook will answer your questions about Treasury topics.
treasuryXL explains the purpose of each Treasury function; what specialists do, examples of activities, FAQs, and a summary.
This ebook is based on the most relevant best practices that Treasury experts provided over the last years. On the website of treasuryXL you can explore additional information on the latest in Corporate Treasury.
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On a regular basis, we write about your career planning in treasury, our opinions, and observations. Two articles on the website of Treasurer Search that are strongly related to this and very well viewed are:
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How is your Treasury knowledge? Today we investigate your Treasury Expertise and ask you an example question that you might face when taking the Treasurer Test…
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