Sustainable Finance Framework – A tool To Align Financial Decision-Making and Sustainability

06-02-2023 | Anastasia Kuznetsova | treasuryXL | LinkedIn |

The recent increase in ESG awareness among consumers and investors, along with regulatory pressure, has prompted companies around the world to incorporate ESG aspects into their business models in order to become sustainable.

However, a transition to more sustainable operations is not possible without new financing. Thus, Corporate Treasurers can significantly help companies to achieve their ESG goals by raising funds for the company’s sustainable initiatives. This can be done through the creation of a sustainable finance framework, which has gained popularity among companies in recent years.

Sustainable Finance Framework and its Components

A sustainable finance framework aims to align financial decision-making with the principles of sustainable development. The framework outlines how a company uses environmental, social, and governance (ESG) factors in its financing, refinancing, and investment processes. As a starting point, corporations typically establish a sustainable finance framework to arrange debt financing for a certain group of projects with positive environmental or social benefits. Many organizations set up their sustainable finance framework in accordance with international guidelines such as the Green Bond Principles (GBP) or Social Bond Principles (SBP), which support the issuance of ESG-related debt.

A well-defined sustainable finance framework will typically contain five components:

  1. Use of Proceeds Clause and Eligible Projects

The use of Proceeds clause defines categories of projects for which a company can use debt proceeds that were raised under its sustainable finance framework. For instance, the Framework of a property developer may cover the issuance of green and social bonds for three project categories:

  • acquisition/development of low-carbon buildings
  • wastewater management
  • affordable housing.

Each project category will also have specific ESG criteria that will help to identify truly sustainable investment opportunities eligible for sustainable financing. For example, a project category “acquisition/development of low carbon buildings” may only allow spending debt proceeds on the acquisition of buildings with an energy efficiency rating of A. Projects that do not fall under eligible project categories, or projects that do not satisfy the established ESG criteria within each project category, will not receive sustainable financing and, thus, will not be undertaken by the company.

  1. Process for Project Evaluation and Selection

Another crucial component of a sustainable finance framework is project evaluation and selection. Corporate Treasurers should establish a method for determining whether new projects available for the company fit eligible project categories and, therefore, can be adopted. All selected projects included in a sustainable finance framework should be reviewed on a periodic basis and before new financing is raised. As a rule, a full list of eligible projects is examined and approved by the CFO to confirm that they meet the ESG criteria of the Framework and, thus, can receive financing.

  1. Management of Proceeds

After the sustainable financing is raised, Treasurers should ensure that funds are properly allocated and used in accordance with the “use of proceeds” clause. Thus, the sustainable finance framework should specify how a company will track the disbursements and allocation of debt proceeds among eligible projects.

  1. Funds Allocation Disclosure & Impact Reporting

The fourth component of the sustainable finance framework is the periodic disclosure of debt-related and project-related information. As long as a company has some outstanding debt raised within its sustainable finance framework, it should disclose, at least annually, the total amount of ESG debt raised, the remaining outstanding proceeds and the allocation of the proceeds across eligible projects. Such disclosures will help the company’s debtholders to understand how and to what extent their capital has been deployed by the organization.

Companies should also evaluate the environmental/social impact of funded projects via verifiable Key Performance Indicators (KPIs). For instance, a property developer can measure the environmental impact of projects under the “acquisition/development of low carbon buildings” category by energy consumption (kWh) and/or energy intensity (kWh/m2) KPIs. Impact reporting is crucial to assess whether the projects that received sustainable financing have achieved the expected positive environmental/social benefits.

  1. Assurance

The last attribute of the sustainable finance framework is independent external assurance. This step is needed to confirm the credibility of the established Framework as well as attest the compliance of the debt issuance process with the principles of international guidelines adopted by the company as a foundation for its sustainable finance framework.

The Enhancement of the Sustainable Finance Framework

The ultimate objective of a sustainable finance framework is to drive the financing of all corporate activities that align with the company’s sustainability goals. As such, Treasurers should gradually broaden the Framework by incorporating other sustainable finance instruments, such as convertible green bonds or sustainability-linked revolving credit facilities, to finance a diverse range of sustainable initiatives that support a company’s transition towards more sustainable operations. Over time, the Framework should be continuously expanded to include the development of new products/services and other sustainable business activities, instead of being limited to the financing of specific project categories that were initially defined in the use of proceeds clause.

 

Sustainable Finance Framework

Core Benefits of the Sustainable Finance Framework

The implementation of the sustainable finance framework can potentially result in the following benefits for the company.

  1. Improved Risk Management

By inclusion of ESG factors in the financial decision-making process, the Framework ultimately forces companies to consider environmental and social risks as well as their interdependences when evaluating investment opportunities. This enables businesses to receive a more complete picture of their risk exposures and, therefore, timely put in place adequate risk management tools that are required to keep company’s exposure to risks at an acceptable level.

The improved risk management that accounts for ESG-related risks is also likely to increase the confidence of capital providers in the company’s ability to survive in the long-term and remain profitable during challenging times. This, in turn, might improve a company’s credit rating, decrease the cost of capital, and enable businesses to obtain new financing on more favourable terms.

  1. Increased Access to Capital

Sustainable finance has gained significant momentum in recent years. Therefore, companies that are perceived as environmentally and socially responsible are more likely to receive investment from impact-oriented investors and financial institutions. Thus, the implementation of the sustainable finance framework can increase a company’s access to capital and provide new source of financing in the face of ESG-oriented investors.

  1. Enhanced Reputation & Credibility

The implementation of a sustainable finance framework also demonstrates a company’s commitment to sustainability, which can lead to a better reputation among stakeholders, and enhance the company’s credibility and trust. This may translate into a wider pool of investment options and stronger relationships with suppliers, customers, and other stakeholders.

Key Takeaways of the Sustainable Finance Framework

  • The sustainable finance framework is an effective tool that can be used by Corporate Treasurers to connect a company’s ESG strategy and financial decision-making.
  • The Framework helps organizations to raise financing for corporate initiatives that support a company’s sustainability goals and have a positive environmental/social impact.
  • By adopting a sustainable finance framework, companies can show their commitment to sustainable development, improve risk management practices and receive greater access to capital. Given this, Corporate Treasurers should consider an opportunity for the development and implementation of a sustainable finance framework within their organizations.

Thank you for reading!

 

 

Anastasia Kuznetsova

 

 

 

Uncovering the benefits of a multicurrency world

03-02-2023 | treasuryXL | Kantox | LinkedIn |

We’re living in a multicurrency world and we’re multicurrency treasurers. You can get a head start on your competitors by simply understanding the benefits of operating with multiple currencies. Start leveraging the multicurrency world we’re in.

Disclaimer: This information is being shared for informational purposes only and was originally published by Kantox (Source)

With so many benefits to operating with the different foreign currencies out there, it is crazy to think that some companies are not taking advantage of this.

In this week’s episode of CurrencyCast we discussed why businesses should consider implementing a multicurrency approach to their FX risk strategy. This article will take a deeper dive into the benefits and give you some insight into how to be a more strategic treasurer.

Why we are in a multi-currency world

In this episode, we analyse a development that many find surprising, but that stands at the core of our thinking at Kantox: the multi-currency world. The prevailing view of a world dominated by a handful of currencies like the dollar and the euro is being challenged as we speak.

We’ll reveal how you can take advantage of the benefits that lie ahead in this multi-currency world and contribute to enhancing your profit margins.

How is technology pushing forward a multi-currency world

The currencies of a number of small, but well-managed economies (together with the natural rise of CNY) are gaining in importance: SEK, NOK, CAD, AUD, NZD, SGD and KRW among others.

The change is not driven in a top-down manner by macroeconomic forces. Instead, it reflects a bottom-up and microeconomic phenomenon, made possible by technology.

Today’s multi-currency world is mostly driven by corporate treasurers taking advantage of Multi Dealer Platforms such as 360T. These platforms have led to a dramatic compression of spreads, increasing liquidity beyond the major currency pairs and reducing the network effects of the USD.

For example, whereas a CAD-MXN transaction used to require two trades involving USD and CAD on the one hand, and USD and MXN on the other, now CAD-MXN can be directly and competitively traded on Multi-Dealer Platforms.

 

currency composition graph of FX reserves from IMF

 

Advantages of the multi-currency world

Back to the issue of the multi-currency world. Let me mention some of the benefits of selling in more currencies (we discussed the advantages on the contracting side earlier on):

  • FX markups. With multi-currency pricing, businesses can monetise existing FX markups.
  • High-margin sales. Companies can drive direct, high-margin sales on company websites with many different payment methods.
  • Reduced cart abandonment. Online businesses can deploy multi-currency pricing as their secret weapon to reduce cart abandonment.

Let’s take this example if you are a company operating with imports from a foreign country there could be some hesitation regarding whether to work with the local currency or not. In certain cases, using the local currency translates into better deals from a commercial perspective, as FX markups from suppliers are avoided. Also, firms get access to a wider range of suppliers.

From a liquidity management perspective, you may benefit from extended paying terms as well giving you more runway to finalise your sales. Finally, from a strictly financial perspective, there could be a wider forward discount of currency pairs which is a way to generate more positive forward points when hedging.

A strategic issue in the age of innovation

By taking FX risk out of the picture, you put your business in a position to confidently use more currencies in day-to-day operations. Additionally, if you then implement the best automation solution that will help you remove time-consuming and error-prone tasks, you could have a strong currency management strategy that becomes a great strategic asset.

On top of that, there are other bonuses to implementing technology:

  • Optimisation of interest rate differentials between currencies
  • More time to devote to value-adding tasks
  • Openness to further automation

Wrap up

Now you know all the benefits of a multicurrency world for currency managers. By empowering commercial teams to always buy and sell in the most profitable currency, the finance team acts as a strategic business enabler within the enterprise. That is the promise of the multi-currency world that is taking shape as we speak.

You are now prepared to face the future of currency management and reap all the benefits of the multiple currencies available. But to keep the ball rolling and make the most of foreign currencies, you need a tool that allows you to have full control of your FX exposure.

That’s why Kantox offers a unique currency management automation solution that enables treasurers and CFOs like you to optimise your FX workflow. Talk with our currency management experts and find out how today.

Treasury Policies & Processes for Crypto Transactions

02-02-2023 | treasuryXL | ComplexCountries | LinkedIn |

This call took place five days after FTX filed for bankruptcy. However our discussion did not dwell on crypto as an investment (We haven’t found a treasurer who would). The interest for treasurers is to help their companies understand the business opportunities of the metaverse, and that isn’t going away.

Source

According to Gartner,’ [https://www.gartner.com/en/articles/what-is-a-metaverse] by 2026, 25% of people will spend at least one hour per day in a metaverse for work, shopping, education, social media and/or entertainment’, and…’A metaverse is not device-independent, nor owned by a single vendor. It is an independent virtual economy, enabled by digital currencies and non-fungible tokens (NFTs).’

So it’s no surprise that many companies are developing strategies to capitalise on what could be a massive business opportunity. Participants in this call comprised treasurers representing companies at different stages of this journey, all facing the challenge that the regulatory and financial infrastructure available is at an early stage of evolution.

  • About half of the participants are still investigating the use of crypto and exploring how it works in case it does evolve within their businesses, but still not necessarily wanting to accept crypto or handle crypto within treasury operations.
  • Risk management to enable safe use in Corporate Treasury remains paramount and it isn’t easy.
  • We are seeing continued evolution around the NFT space and using crypto for settlement. But it continues to be quite limited.
  • Accounting requirements for how crypto currencies are handled are still not clear and not necessarily sustainable for the future. Regulations are going to evolve.
  • It is fascinating to hear, for the first time, crypto working capital is being used to match crypto receivables to payables in certain types of crypto currencies, e.g. Ether.
  • In the last 12 months companies have started to buy land in the metaverse in order to understand how it works as a marketing tool.
  • Selecting crypto currency platforms is challenging and KYC with some is a (reassuringly) painful experience. The providers discussed in this report include: Etherium, Coinbase, Mt Pelerin, Bit Panda and Anchorage.
  • For the most part, banks are watching the space and have yet to come up with solutions for corporates and CBDCs are at an early stage, but one thing we can be sure of is that there is a lot more to come on this topic.

Crypto has clearly not gone away for corporate treasurers and I’m certain we’ll see further uses going forward. There is a huge amount of detail in this report, which is essential reading for any treasurer wishing to understand the challenges or benchmark their processes.

Contributors:

To access this report

Acces to the full report is only available to subscribers to “Treasury Practice”. If you would like to request a subscription to this topic, please message [email protected].

Training PSD2 & Open banking: impact on the financial ecosystem and new challenges

31-01-2023 | François de Witte | treasuryXL | LinkedIn |

treasuryXL expert François de Witte will lead the upcoming advanced training on PSD2 & Open Banking, exploring its impact on finance and new challenges. Read below more

Find out more and sign up

This training program prepares participants for 2 major challenges of the upcoming years in banking: PSD2 and Open Banking. This will have a major impact on the financial ecosystem and will create new challenges.

The goal of this training course is to:

  • become aware of the ways PSD2 & Open Banking affect banks and other players in Europe;
  • understand the impact of the technical requirements with a focus on strong customer authentication;
  • outline the risks and responsibilities of the involved parties within the new regulatory framework;
  • understand the impact of Open Banking APIs (Application Programming interfaces);
  • understand the impacts of the PSD2 & Open Banking the financial ecosystem;
  • evaluate the risk and opportunities created by PSD2 & Open Banking the banks and the new players;
  • determine an action plan for your company.

 

Find out more and sign up

 

 

Francois de Witte

 

François de Witte

 

 

 

How are fintechs combating anti-money laundering challenges?

30-01-2023 | treasuryXL | Refinitiv | LinkedIn |

A recent white paper from Refinitiv – produced in collaboration with global consultancy, FINTRAIL – discusses the key elements currently shaping the evolving fintech space and the key trends that will be shaping the fintech landscape in 2023.

  1. New findings from Refinitiv and FINTRAIL, based on interviews with experts from different fintechs across a range of geographies, have identified five key factors that are shaping fintechs today.
  2. The white paper identified that the primary factors shaping fintech in 2022 were technology, data, talent, governance and efficiency, and it will continue in 2023.
  3. Fintechs also have to keep tight control of the anti-money laundering (AML) processes to protect against widespread illicit activity and ensure regulatory compliance.

For more data-driven insights in your Inbox, subscribe to the Refinitiv Perspectives weekly newsletter.

Constant evolution

The fintech industry is one of dynamism and innovation; a space where agile players harness new technology and challenge the status quo of the traditional financial services industry every day.

Undoubtedly, this delivers substantial opportunity for those involved in the sector, but at the same time, financial criminals are similarly leveraging technology and using advancements to devise new ways to further their illicit activities.

In this fast-paced space, characterised by evolution and a growing financial crime threat, what key elements are at play and what factors have shaped and defined the industry in 2022, and will continue to do so in 2023?

Findings from Refinitiv and FINTRAIL, based on interviews with experts from different fintechs across a range of geographies, have identified five key factors that are shaping fintechs today.

Five factors shaping fintechs today

Five factors shaping fintechs today: technology; data; talent; governance, efficiency

Technology

The fintechs we spoke to stress that the right technology can make all the difference when it comes to managing financial crime, with some describing machine learning and artificial intelligence (AI) as “indispensable tools”.

This view is in line with the recommendations of the Financial Action Task Force (FATF).

Interviewees also stress the importance of “explainability” – in other words being able to explain what data is used to reach different conclusions and why the results can be trusted – when introducing technology.

According to FATF, applying new technologies makes tackling financial crime faster, cheaper and more effective

Data

Leading technology needs trusted, comprehensive data, but fintechs highlight that striking a balance is key. Requiring too much information can damage the customer experience, while not enough leaves fintechs vulnerable to financial crime.

Collecting the right data – and the right amount of data – and then building a complete picture of risk is key to the combined fintech goals of maximising efficiency, keeping customers happy and protecting against financial crime.

Talent

Technology and data are critical in managing financial crime threats, but a third and equally critical element is invaluable human expertise. The right people across difference disciplines can make all the difference.

Fintechs tell is that from the first and second line of defence to engineers and data scientists, finding talent to scale is an essential consideration

Those we interviewed said that engineers and data scientists are key, and further that the compliance profession is considered “recession-proof” – upskilling compliance team members should be a key priority for those in the sector.

Interviewees also highlighted that fintechs should concentrate on attracting and retaining key staff, but should also consider outsourced solutions for additional support and expertise.

Governance

Effective governance is a key consideration for fintechs as they grow and evolve. The nature of the industry and the rapid growth trajectories often followed by sector participants mean that effective AML controls and good governance need due attention.

Plus, fintechs agree that governance models should not be static – they need to adapt over time.

Efficiency

Efficiencies are increasing in the industry, with new technology now enabling fintechs to integrate specific data points alongside behavioural biometrics to help them spot suspicious activity.

For example, device identification data can identify if an account is accessed from a new device and this can be compared to a client’s history.

To further boost efficiencies, fintechs say that adopting a dynamic approach to risk is key and avoids wasting often scarce resources.

Discover more about our KYC and anti-money laundering solutions for the fintech industry

Keeping pace with changes in fintech

Fintechs can expect these top trends to continue in the year ahead and should especially take note of the powerful combination of tech, data and human expertise that are not only shaping the sector, but can enable better compliance and good governance, while boosting efficiencies.

As the industry continues to grow and develop at pace, many players are rightly concerned with ensuring an engaging and positive customer experience that offers connectivity and seamless interaction. They must, however, also keep tight control of the AML processes they will need to protect against widespread illicit activity and ensure regulatory compliance.

Read the full white paper. AML challenges for fintechs: Insights for the future

AML challenges for fintechs: Insights for the future

5 Treasury Trends for 2023: Managing Currencies in an Age of Uncertainty

26-01-2023 | treasuryXL | Kantox | LinkedIn |

Scared about 2023 looking even worse than the crazy last three years? Keep calm and take a holistic approach to currency management. 

Source: Kantox

If we look back at the economic landscape of last year, treasurers and CFOs have been dealing with risky scenarios for a while. But is the future as dark as some say? Our latest episode of CurrencyCast featured the treasury trends for 2023. In this article, we will take a deep dive into those trends and give you some tips on how to tackle the challenges in this volatile landscape.

Treasury trends for 2023

Consultants and pundits are busy laying out scary scenarios for 2023. However, the future is uncertain so let’s not waste time in futurology trying to predict what’s coming.

Instead, we can focus on understanding the treasury trends of 2023. In this article, we’ll analyse those trends with a focus on currency management and give you actionable tips on how to handle any hurdles ahead.

CFOs and corporate treasurers need to be well prepared for the upcoming challenges and opportunities as they manage currencies. The top five priorities in the corporate treasury space for 2023 are:

  1. FX volatility
  2. Shifting interest rate differentials
  3. Liquidity management
  4. Cash flow visibility
  5. Automation

FX volatility

In the past year, the financial markets have seen high levels of FX volatility and an unstable economy that seems to point towards a recession. Trends of high inflation, banks’ rising interest rates, political instability, and more will remain in the new year.

Hence why, it is fair to say that currency managers need to be well-prepared to face interrelated risks affecting FX rates. Companies dealing with foreign currencies will have difficulties accurately forecasting cash flows.

However, there is no reason to panic yet. There are a few strategies that corporate finance professionals can implement to tackle FX volatility; we will explain them later.

Shifting interest rate differentials

Shifting interest rate differentials are a likely scenario in 2023 as central banks act to tame inflation, each at its own pace. The good news is that companies can optimise such interest rate differentials across the entire FX workflow. Here are a couple of examples:

– With favourable forward points, pricing with the forward rate improves the firm’s competitive position without hurting budgeted profit margins.

– With unfavourable forward points, pricing with the forward rate helps managers avoid losses on carry and the temptation of excessive pricing markups.

– Finally, the cost of hedging can be lowered by delaying hedging execution with the help of automated conditional FX orders.

. 

 

Liquidity management

In addition, the current emphasis on strong liquidity management will persist well into 2023. Liquidity management allows the treasury team to have a wider view of the company’s resources and be financially agile.

This will give any treasury professional the required accurate insights on the cash projections. And ultimately, help the business be prepared for potential liquidity risks that may arise.

Cash flow visibility

Avoiding less-than-stellar cash flow visibility will be top of mind for treasurers in 2023. As economic cycles could be disrupted again, companies need to be able to get ahead of the curve and reduce deviations in their cash flow projections.

However, we believe that the importance of having accurate cash flow forecasts is somewhat overstated, at least when it comes to currency risk management.

To understand why this is so, the treasury team should consider how the different cash flow hedging programs deal with this concern:

– In firms with dynamic prices, forecasting accuracy is not much of a concern because firm sales/purchase orders have a very high occurrence probability.

– In firms with steady prices across several campaign/budget periods, layered hedging programs build the hedge rate in advance instead of protecting an FX rate.

– In firms with steady prices for a single campaign/budget period, conditional orders to protect the budget rate provide managers with time to update their forecasts.

For better cash flow visibility in the new year, companies will need to consider their ability to implement hedging programs that best suit their needs.

Automation

In 2023, the role of the corporate treasurer will require professionals to improve their technological skills. The traditional treasury function is shifting towards an automated digital infrastructure that enables increased efficiency and faster processes.

To manage currency risk in the new year, treasurers will need to move away from siloed systems and wasting time on manual tasks. Instead, they need to look for a solution that is able to automate the entire FX workflow.

Tools that are able to connect, via APIs, to their treasury management system and other data sources, for updated reports that give accurate insights into their FX exposure.

Facing the challenges

Now you know the treasury trends that will be dominating 2023 for corporate treasurers. But we also want to give you some tips on how currency managers should act in the face of such challenges.

As we like to emphasise at Kantox, currency management is much more than currency risk management. And currency risk management, in turn, is more than just the act of executing a hedge. Let us see this in more detail.

Consider the case of automated conditional orders to protect a budget rate. To the extent that the underlying levels are not hit, no trades are executed. Yet, you are still actively managing your firm’s exposure to currency risk.

Delaying hedges may lead to netting opportunities that ultimately result in less, not more, hedging transactions. The results are:

  • Less trading costs
  • Savings on the carry in the event of unfavourable forward points
  • Less cash immediately set aside for collateral requirements

The right approach for 2023

Pundits predicting a catastrophic 2023 may turn out to be right. Then again, they might not. In any case, the priority for currency managers is to take a holistic view of currency management that allows them to:

  • Embrace the entire FX workflow
  • Avoid silos and have commercial and finance teams work hand in hand
  • Take advantage of the profit margin-enhancing opportunities offered by currencies

As you have seen, corporate treasurers will need to be well-prepared for all the interrelated risks of the turbulent economic landscape. With the help of the right automation tools, the treasury function can have a strong currency management strategy that helps them storm the weather outside.

Kantox is the currency management automation solution that covers the entire FX workflow so you can improve your profit margins and leverage foreign currencies.

Book a free strategy session with our currency management specialists to learn more.

Programme: International Treasury Management and Corporate Finance – Advanced

26-01-2023 | François de Witte | treasuryXL | LinkedIn |

treasuryXL expert François de Witte will conduct advanced training on International Treasury Management and Corporate Finance at the House of Training in Luxembourg on March 2nd. Read below more

Register here
Description

The treasurer is the custodian of the company’s daily liquidity and financial risks. He manages, anticipates, secures and help optimize cash flows by ensuring that financial needs are covered and appropriate instruments are used, as well as take necessary measures to mitigate financial risks.

Objectives

At the end of this programme, the participant will able to:

  • assist the treasurer of large corporates directly and practically
  • take over treasury responsibilities in a SME

The various modules will allow to acquire an in-depth knowledge of the different areas of the “Corporate Treasurer” profession.

Programme

Module 1 : Financial Maths in Excel (Focus on treasury & corporate finance)

Speaker: Hugues Pirotte / Professor of Finance at Solvay Brussels School

 

  • Focus on treasury & corporate finance
  • Time value of money
  • Vocabulary
  • Compounding intervals
  • Discount and annuity factors
Module 2 : Payments, Cash Management and Banking Relations – Advanced

Speaker François De Witte / Treasury Consultant

 

  • Recent trends in payments.

  • Liquidity management – Basic concepts.

  • Cash-Flow forecasting – Advanced topics
  • Treasury organisation – In house bank and payment factory
  • Treasury technology – TMS
  • Hot topics on banking relations – RFP and implementation.
  • Challenges of the banks and impact on the banking relations
  • Open banking – Opportunities for corporates.
Module 3 : Trade Finance – Advanced

Speaker: Benjamin Defays / Senior Associate Vice President

  • General context
  • Cultural aspects
  • Why trade finance in treasury
  • Type of instruments
  • Bank guarantees
  • Bürgschaft
  • Surety bonds
  • Letters of credit
  • Cash against documents
  • Forfeiting
  • Factoring & reverse factoring
  • Alternatives
  • Cash-in-advance
  • Corporate guarantees
  • Disruptive technologies
Module 4 : Practical Aspects of International Finance Regulation

Speaker: Lievin Tshikali  

With the successive financial crises, serious concerns have naturally been raised in the population, forcing G24 governments and international organisations to build an incredible set of laws to “better” regulate/monitor the activities of banks and other financial institutions. This module provides an overview of international finance regulation. It considers some regulatory and practical issues affecting transnational financial transactions undertaken by global investment and corporate banks.

  • International financial crises
  • Evolution of the international banking supervision
  • Functioning of capital markets
  • Governance – Internal control framework
  • Anti bribery / Whistle-blower policies
  • Overview of AML/CFT regulations
    • Tax evasion – FATCA-CRS regulations
    • Notion of ultimate beneficiary owners
    • Politically exposed persons
    • Market abuse regulations
  • MIFID principles
  • GDPR principles
  • International sanctions regimes
Module 5 : Risk Management Applied to Treasury – Advanced

Speaker: François Masquelier / CEO

 

  • FX, interests
  • Counter-parties
  • Others (reputation, etc…)
  • Objectives of hedge accounting
  • Required documentation and formalisation of hedge accounting relationships
  • Different types of hedges (fair value, cash flow, net investment)
  • Booking adjustments of different hedge types
  • Typical examples of different hedge types
Module 6 : Technologies Applied to Treasury

Speaker: François Masquelier / CEO

 

  • New technologies
    • Blockchain, crypto-currencies, smart contracts
  • Treasury Console (Bloomberg, Thomson Reuters)
  • TMS, Financial Technology
Target Audience

Financial professionals (finance, banking, accounting, tax, treasury…) willing to acquire an in-depth knowledge in corporate treasury and wishing to exercise this knowledge in practice.

Prerequisites
Register here

 

 

Francois de Witte

 

François de Witte

 

 

 

What is possible in Complex Countries for Treasury?

26-01-2023 | treasuryXL | ComplexCountries | LinkedIn |

ComplexCountries reports detail how corporate treasurers approach challenges in complex countries, across associated treasury processes and how they adapt to economic and regulatory changes.

Their reports cover a wide range of topics associated with treasury processes in these countries, and how they are impacted by economic and regulatory changes. This includes how corporate treasurers approach currency risk management, compliance with local regulations, and maintaining cash and liquidity in the face of political and economic instability. The goal is to help treasurers navigate these challenges and protect their company’s financial position.

Find below some of the free reports detailing complex country challenges for treasurers

Find here all reports

 

Want access to all reports?

Please log in on the website of ComplexCountries. Or contact ComplexCountries to find out about their subscription packages.

Six Tips to Protect Your Organization Against Payments Fraud

25-01-2023 | treasuryXL | Kyriba | LinkedIn |

By Bea Saldivar, Global Payment, ERP and Treasury Advisor
Andrew Deichler, Content Manager, Strategic Marketing

Source

 

The Threat of Impersonation

Payments fraud in 2021 was as bad, if not worse, than the year before, according to the 2022 AFP Payments Fraud and Control Survey. But even though business email compromise (BEC) scams dropped substantially last year, many organizations are still falling prey to them and incurring significant losses.

At the heart of BEC scams and more recent developments like deepfake fraud is impersonation. Cybercriminals use social engineering tactics to develop profiles on company employees or routine vendors, which they then impersonate to dupe unsuspecting people into making critical mistakes.

To identify an impersonator, it’s helpful to know the telltale signs. More than likely, the payment request will be urgent and will attempt to exploit unique circumstances, such as a specific time when employees are out of the office. Additionally, if your organization is making a lot of payments to contractors for a project, fraudsters might attempt to exploit that.

For example, Philabundance, a Philadelphia food bank lost about $1 million due to a successful BEC scam. The food bank was in the process of building a $12 million community kitchen. The accounts payment (AP) team received an invoice from what they thought was a construction company supplier and made a payment.

The Government of Carrabus County, N.C., also found itself victimized by a vendor BEC scam. The county intended to send money to a contractor it had been working with for the construction of a new high school. Through a series of emails that began in late 2018, the fraudsters made requests to update bank information. The county didn’t do its due diligence and ultimately sent more than $2.5 million to the fraudulent account. While over $776,000 was ultimately recovered, about $1.7 million remains unaccounted for.

Common Fraud Myths

When it comes to payments fraud, many treasury and finance departments still get lulled into thinking they are more protected than they are. Organizations may assume that their procedures are infallible or that any lost funds will be reimbursed, but they quickly get a wake-up call when a successful attack happens. The following myths are common.

“We have an approval process in place.” Even the companies with the strictest policies in place can still have a breakdown in processes. Employee ID/password combinations can be stolen. Regional treasury/shared service centers may require fewer numbers of approvals due to limited in-country staff. And companies with multiple ERP systems might have different approval processes—a scenario that is ripe for fraud.

“My bank will cover me.” There is no obligation for a bank to cover any client for payments fraud, unless the bank itself has been breached, like in a bank employee scheme. The bank may still reimburse corporate clients on a case-by-case basis, but don’t bet on it.

“We have cyber insurance.” Many companies assume that if they purchase cyber insurance, that they are covered in the event of a loss. However, if an organization can’t prove that it took all the right steps to protect itself, it’s very likely that the insurance policy won’t cover the loss. Many plans don’t cover BEC scams, for example, because they involve an employee making an error. There have been several legal cases where insurance firms have refused payment and the courts sided with the insurers. Furthermore, even if cyber insurance does agree to pay out, you might still have to pay a high deductible. For some plans, that cost can be tens of thousands of dollars.

What Can You Do?

Fortunately, there are many ways to protect your payments and your data. The following tips can help.

Embrace the cloud. Organizations should embrace cloud technology to secure payments and systems. IT teams know that payments data and connectivity are more secure when hosted externally. However, not all cloud solutions are alike. Solutions like Kyriba Enterprise Security ensure that treasury, payments, and risk data meet internal security policies and international security requirements while providing 24/7, global support.

Align all departments. Your internal IT department, as well as any key areas that touch payment processing areas such as treasury, accounts payable, shared services, etc. all should be aligned with your security policies. With more and more companies allowing remote work, companies must ensure that all employees are using effective protections such as strong passwords, policy controls, multifactor authentication, IP filtering, single sign-on and data encryption.

Automate payment processes and standardize controls. Automation allows organizations to standardize the payment journey from the initial request to the receipt of the payment. Risk lies in the exceptions to a standardized process, i.e., payments made outside of this typical format that provide fraudsters with opportunities. Again, these are usually one-time, urgent payment requests that can come in for things like mergers and acquisitions, legal settlements, emergency payroll, etc.

Enable real-time screening, alerts, and notifications. The rise of same-day and real-time payment systems has increased the need for real-time responses to fraud attempts. Modern fraud detection software uses artificial intelligence (AI) and machine learning to screen payments against historical payment data, pinpointing any anomalies.

Implement fraud prevention workflows. Modern payments fraud modules support fully automated, end-to-end workflows for the resolution of outstanding suspicious payments. Users can determine how each detected payment should be managed, enforcing the separation of duties between the initiator, approver, and reviewer of a detected payment.

Know your vendors. Vendors can be a major liability for your company. In some cases, vendors are granted access to their customer’s network credentials. If that vendor’s security protocols are lacking, they can become an unknowing backdoor into that customer’s systems. This is what happened in the infamous Target breach in 2013. Therefore, it is imperative to have a detailed information security questionnaire that can provide confidence in the governance and risk programs that a vendor has in place. Additionally, with vendor BEC scams proliferating, organizations need to make sure that requests for payment instruction changes are verified directly with the vendor before any transactions are completed.

Safeguarding Your Payments

To mitigate the risk and safeguard your payments, organizations must have a unified solution that connects ERPs, internal and external systems that allows for a secure, end-to-end payment journey. Furthermore, when exceptions occur, protocols can’t be abandoned no matter how urgent the request. Any departments that touch payments need to understand that one slip up can be catastrophic, not only leading to loss of funds, loss of job and reputational risk for the whole organization.

Kyriba is here to help you protect your organization against payments fraud. Learn more here.

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