How can businesses protect their bottom line against the currency markets?

28-01-2021 | treasuryXL | XE |

Does your company have an exposure to foreign currencies? Wybe Schutte explains in below interview how business can tackle the complexity of FX.

AN INTRODUCTION TO

Wybe Schutte is head of Business Development Europe at XE.com. Wybe’s career has always centered around international business development and managing relationships. Within XE.com both play an important part as globally we XE is the trusted partner of many business in helping them manage & mitigate the risk that is associated with dealing with multiple currencies, be this through simple rate regulation or looking at high level currency risk management & hedging solutions.

We asked him 10 questions. Let’s go!

 

INTERVIEW

1. Can you tell something about XE and its mission?

At Xe, we live currencies. Most people know Xe from the currency converter, however we also provide international money transfer services for business for over 25 years.  Xe’s Business Solutions supports company’s that have an exposure to foreign currency, supporting them to safeguard profit margins and improve cashflow through quantifying the FX risk they face and implementing strategies to mitigate it. So that our clients can focus on their core business and do not have to worry about their FX.

2.What kind of FX risk types exists and how does XE deal with it?

We look within each business to see where the currency risks are, and whether these can be offset. For example, any sales made in Euros could be offset against Euro costs. If there is still an exposure this is where products such as Forward Contracts can be considered in order to provide protection against the risk. Currency risk can be divided into three types: Transactional Risk, when a business deals in a country that differs to their base currency; Transnational Risk, when a business has an asset or liability overseas on their balance sheet, and Economic Risk where a movement in the exchange rate can give a business a competitive advantage when competing for a particular market.

3. How can you measure the different types of FX risk?

FX Risk can either have a negative or positive impact on a business’ bottom line. If you look back over the last 10 years you can understand what the potential impact could be in the most extreme, least extreme and average scenarios over your given timeline.

This can be done by looking at the high & low points of the market and a business’ FX exposure. This step helps companies to understand what the impact of the net exposure can have on the bottom line.

4. What are the most common critical FX problems that businesses have?

Businesses that have a transactional exposure to the currency markets can differentiate between committed and forecasted exposures. A committed exposure is when the price for a good or service in a foreign currency is known and contracted. Therefore, any movement in exchange rate has a direct impact on their profit or cost unless hedged. A forecasted exposure is when a business looks to the period beyond the committed period to see what their requirements may be. Confidence levels into forecasted periods can vary largely and it is normally the case that the further out a business forecasts, the lower the confidence levels.

5. How can businesses protect their bottom line against the currency markets?

There are a number of key stages that a business can look to follow in order to mitigate FX volatility. Firstly, Identify the type of risk, quantify the risk elements, and then look to build a strategy and agree the implementation process. These stages will allow you to decide the products that are most suitable, so you can then move to market timing and execution. Lastly, you should look to review, revise and adjust your approach on a regular basis. It is important to remember that it is not about market speculation but about mitigating your risk.

6. What is, in your perception, the biggest benefit of a working Foreign Exchange strategy?

Given the ever-uncertain world in which we currently live in, finance departments and treasury centres could be looking to build a strategy to deal with currency fluctuations, which over time could have a considerable impact on your company’s bottom line. A structured approach to foreign exchange risk can enable your business to make strategic planning decisions, rather than attempting to respond to day-to-day developments in the market.

7. Do you experience differences in FX before COVID19 and the time we live in now? What are the differences?

There has been significant movements in the currency markets during the Covid19 period and there are still many factors that influence the daily rates. During these uncertain times our clients are looking for certainty and stability. And although price is always important, other key factors like security and credibility became more important. Naturally each of our clients has been impacted very differently and we have worked with them to provide the solutions and flexibility they needed. We have welcomed many new clients from new geographies? as they were growing, and we supported existing clients that were growing or adapting their business models to suit the changing market.

8. The market is always changing, how does XE stay top of mind of the latest developments in the currency world?

We work closely with our clients to continuously understand their needs and adjust accordingly. Our expert Dealers keep a close eye out on the market. Understanding the movements, resistance levels, and key economic & political updates that can influence the market so that our clients do not have to worry about that. Xe also works closely with our sister companies and parent company Euronet Worldwide.

9. How does the future of FX look like in your perspective?

The near future could be set to weather extraordinary levels of balance sheet expansion and recession, potentially leading to a longer stimulative/expansionary monetary policy which could in turn depress currency rates of the countries that bear them. Near to medium term impacts of this could include a lack of major economic expansion as capital returns are often negative when factoring inflation. This may mean that we see a re-composition of FX strength toward commodity-based currencies (CAD/AUD/NZD) and alternative safe havens (CHF). However, we could see this shift in the longer term as public debt, in particular, becomes more tenable and attractive at such low interest rates and could invite broader investment for countries and to a degree private industry.

We have witnessed ample FX market volatility from an increased reliance on a more narrow data core. Inflation and interest rates and also public debt and balance sheet expansion narratives are having the most impact on rate movements. With this in mind; where much of the corrective forces required are formed around policies related to these key issues, it appears that volatility could behere to stay for at least the coming 6-12 months and beyond.

10. What has been your best experience ever in the world of currencies?

Supporting a scale-up with their complex FX requirements and enable them to grow their business in a short period of time by eliminating the FX risk and provide significant costs savings along the way.

 

About XE

At XE, they live currencies. XE provides a comprehensive range of currency services and products, including their Currency Converter, Market Analysis, Currency Data API and quick, easy, secure Money Transfers for individuals and businesses. They leverage technology to deliver these services through their website, mobile apps and over the phone.

Last year, XE helped nearly 300 million people access information about the currencies that matter to them and over 350,000 people used XE to send money overseas. Thousands of businesses relied on XE for information about the currency markets, advice on managing their foreign exchange risk or trusted XE with their business-critical international payments.

International Payments & FX Risk management for business

XE Business Solutions can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. We provide a comprehensive range of currency services and products to help you access competitive rates with greater control.

At XE, they share the belief that behind every currency exchange, query or transaction is a person or business trying to accomplish something important, so XE works together to develop new and better currency services that put their customers first.

XE is proud to be part of Euronet Worldwide (Nasdaq: EEFT), a global leader in processing secure electronic financial transactions. XE is part of the Money Transfer Division of Euronet and is the unification of HiFX and XE.com.

Visit XE.com

Read XE blogs

Crisis Management: Why Treasury & Finance are pivotal to recovery

| 26-01-2021 | treasuryXL | Nomentia |

Initiating a crisis management strategy is now top priority for people, businesses and Governments alike. Utilizing and developing survival capabilities is proving challenging for many organisations, including cash flow forecasting and managing risk around major supply chain disruptions.

Diligent Cash Management and scenario analysis are both integral to managing uncertainty during the current crisis but also positioning finance and treasury leaders as pivotal to driving successful recovery planning.


Top things businesses should be concentrating on during the current crisis

Most organisations have a real need to understand what their current liquidity is: today, tomorrow and into the future. Finance and treasury must continue to run the business as best as they can but, to do this effectively, they need to know how much cash they have to work with on a daily basis. Therefore, group-wide, real-time cash visibility and future cash forecasting are crucial – if you don’t have enough liquidity in the business then trouble could be looming on the horizon.

The first step is to figure out what the real cash picture looks like, identify gaps and put the necessary measures and contingencies in place to avoid nasty surprises. Bill payment periods may have to be extended, funding requirements and arrangements revisited, hedging policies re-worked etc but the big picture i.e. cash visibility, is critical.

Cash forecasting comes next in order of priority, gathering a full and concise picture of short-term cash availability is imperative. Maximising business agility with some ‘what if’ scenario modelling may be required, for example: what happens if we don’t get paid a percentage of what we are expecting, what fall back positions do we have on government grants, loan agreements etc. Again, the key driver is knowing your current cash picture now and today, allowing you the best possible position for making strategic, next-step decisions. And the situation is real, a Guardian report, on the 2nd April, states 6 out 10 (60%) UK firms have no more than 3 months of cash left!

Many companies are struggling with cash forecasting, they simply don’t have adequate tools in place. What can they do, right now, given the logistics of remote working?

Thankfully there’s a lot they can do, and quickly. Ensuring whatever systems they have in place for managing liquidity are as automated as possible to enable real time, up to date information access on cash visibility. If automation is a problem or the company is still using traditional manual processes, then change as soon as possible. This is not as difficult as it sounds as many cash management solutions are now available on monthly on-demand payment plans, cloud based and can be installed quickly and efficiently without the need for IT involvement, onsite implementation teams or large upfront fees.

Given the availability of cloud-based cash forecasting solutions, systems can also be accessed remotely so staff working from home can work as efficiently and effectively as if they were operating from their respective office environments.

Actionable advice for post-crisis future planning

Preparedness. Post-crisis analysis will be critical for all organisations. Some will have managed better than others, particularly those who had previously invested in technology upgrades and system automation. Questions around: how well we were prepared, what worked or didn’t work so well, will be food for thought for all business leaders.

But the fact remains technology is absolutely key to maintaining business agility and formulating crisis preparation. Automating as many tasks as possible, in order to provide real-time access to all the data and information needed to make quick and informed decisions, can mean the difference between success and failure. Many organisations will use the time now and post-crisis to reassess technology needs and processes and plan investment in tech upgrades and automation to improve agility, accuracy and efficiency for the future.

Here’s a round-up of some actionable advice for finance and treasury leaders:

  • Know your cash availability today and going forward, focus on: group wide, real-time cash visibility and future cash forecasting
  • Consider bill payment extensions & re-visit funding requirements
  • Cash forecast regularly & consider fall back positions across a range of scenarios
  • Automate as much as possible so you’re benefiting from real-time, up to date information on cash visibility – make those upgrades as soon as possible
  • Cloud-based cash forecasting tools are more affordable and easier to implement than you might think – empower your staff with the ability to work as effectively as required, remotely
  • Reflect on how well you were prepared for this current crisis. What worked and what didn’t work so well
  • Automate as much as possible so that you benefit from real-time, accurate data to enable you to make key decisions as quickly as possible

Information is power, now more than ever.

About Nomentia

Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!

 

 

 

Three Basic Principles your Company needs to follow to prevent Payments Fraud

| 20-01-2021 | TIS |

Even the best tech solutions may not help you prevent and detect fraud, if your basic security procedures are insufficient. Based on our experience helping world leading brands set up proper controls against payments fraud, we believe that payment security is a much broader topic than just fraud. Therefore, payment fraud prevention or detection can only be a meaningful exercise when it is an integral part of a company’s overall payment security strategy.

 

Fraudsters come up with new ideas to scam companies all the time. As digitalization transforms the way payments are being made, the risk for cybercrime also increases. Recently, companies have become prey to business email compromise attacks (BEC): Someone will impersonate a high-level manager and tell an employee that due to extraordinary circumstances they need to make a payment right then and there. As the name suggests, this is usually done via email, but fraudsters have become more creative. In some instances, a voice imitation software was used to convincingly fake a manager’s voice on the phone. Because of nefarious scams like this, it is important to raise awareness for security and fraud prevention among your employees.

 

However, fraud is not always an external threat. Often, fraud happens within a company. For big companies it can be a struggle to keep track of all payments that are made across their worldwide subsidiaries – especially, if they are made manually. Unfortunately, fraudulent payments made by employees are usually detected afterwards – if they are detected at all.

It is therefore important to build a payments security strategy that works on all levels. But what does that mean? Where should a company begin?

A good start is to make sure that you have a system where each step of a payment process is visible and well-documented. Remember: Transparency and visibility are the enemies of fraud. You should always have control of all your payments. Standardization of payment processes and workflows is one step closer to better visibility and control. This way, fraud can be stopped before it has even happened. The following three basic principles can lay the groundwork:

1. Segregation of duties

This is a no-brainer. When responsibilities are shared, people can keep an eye on each other. Ideally, every critical payments’ process should involve multiple people or even multiple departments. Suspicious transactions are spotted at once.

2. A single payments’ gateway

Even if your payments are not fully centralized, it is very helpful to have a single payments’ gate. Combined with value-added services such as validation, multi-step authorization and routing, payments can be managed end-to-end. Additionally, centralized data visibility supports internal controls and audit compliance and the monitoring of transactions becomes much easier.

3. Appropriate designation of signature authority

Multi-level approval processes need clearly defined designation of signature authorities. Make sure that your workflows are sufficient and flexible enough to accommodate your company’s needs.

The TIS corporate payments platform has designed many enablers and features for its cloud-based platform to support payment security.  You can standardize and automate your payments processes, enforce segregation of duties, and manage signature authorities from wherever you are.

 

About TIS

TIS (Treasury Intelligence Solutions GmbH), founded in Walldorf, Germany in 2010, is a global leader in managing corporate payments. The Financial Times named TIS as one of “Europe’s Fastest Growing Companies” for 2019 and 2020. Offered as Software-as-a-Service (SaaS), the TIS solution is a comprehensive, highly-scalable, cloud platform for company-wide payments and cash management. The TIS solution has been successfully used for many years in both large and medium-sized companies, including Adecco Group, Hugo Boss, Fresenius, Fugro, Lanxess, OSRAM and QIAGEN. More than 25% of DAX companies are already TIS customers.

 

 

The future of trading: The rise of data analytics in trading

11-01-2021 | treasuryXL | Refinitiv |

 

Redefining data: What is your strategy?

With more information available than ever, traders must find the right data, make sense of it, and ultimately take action.

 

 

With more information available than ever, traders must find the right data, make sense of it, and ultimately take action. Unstructured information, the explosion of alternative data, and the need for trusted sources makes an already daunting task even more complex.

 

In our second report with Greenwich Associates on the trading desk of the future we explore the data that will keep markets moving over the next 3-5 years. With an overwhelming 85% of those surveyed planning to increase spending on data management, the value of financial data is clearly increasing.

Alternative data tops the list of most important data types, but is only useful if traders trust the source. When it comes to issues of scale and trust, 41% of those surveyed will rely on large financial markets data aggregators. Finally, analytics to interpret existing, new and unstructured data are becoming as critical as finding the data itself.

 

The bottom line? Everyone needs a data strategy.

 

Download & Acces full report

 

 

Executive Briefing: The Next Gen Architecture for a Digital Treasury

07-01-2021 | TIS |

 

Read TIS’ new executive briefing “The Next Gen Architecture for a Digital Treasury”
and find out how to digitalize treasury with a best-of-breed ecosystem!

 

Leverage the expertise of multiple specialists with seamless API integration and cloud technology. Find out more about:

  1. Advantages of specialist vendors compared to All-in-One solutions for treasury
  2. How seamless data flow through API integration can deliver better user experience and faciliate strategic business decisions
  3. How to set up a best-of-breed solution that is tailored to your company’s treasury needs and future growth

About TIS

TIS (Treasury Intelligence Solutions GmbH), founded in Walldorf, Germany in 2010, is a global leader in managing corporate payments. The Financial Times named TIS as one of “Europe’s Fastest Growing Companies” for 2019 and 2020. Offered as Software-as-a-Service (SaaS), the TIS solution is a comprehensive, highly-scalable, cloud platform for company-wide payments and cash management. The TIS solution has been successfully used for many years in both large and medium-sized companies, including Adecco Group, Hugo Boss, Fresenius, Fugro, Lanxess, OSRAM and QIAGEN. More than 25% of DAX companies are already TIS customers.

www.tis.biz

Webinar: Trends for Treasury and Cash Management 2021

| 04-01-2021 | treasuryXL | Nomentia |

Treasury & Cash Management Trends 2021

A new year is just ahead of us. And what better way to start the year than to look at trends that will shape our business in the coming months.

Some of the trends derive from the global pandemic that is still showing its effect on the global economy and businesses around the world but other trends have been long brewing or just got further amplified.

Date, Time and Registration


Date: Thursday, January 14, 2021

Start: 13:00 CET / 14:00 EET

Duration: 45 minutes

Register: click here

Some of the topics Nomentia will cover

 

  • Centralization, in 2021 for real? A joint survey we did with GTNews showed that centralization is often stifled by internal roadblocks such as prioritizing the topic internally across functions.
  • This relates to the second trend for 2021, which is the role Treasury functions will take in bridging internal silos.
  • On top of this also payment fraud is a topic that has only further increased during the pandemic. Our survey shows that almost 50% of respondents consider fraud as a big challenge.
  • Lastly we will take a look at the death of monolithic platforms. In 2021 we will see the trend toward best-of-breed platforms continue.

Who should attend:

 

Cash Managers, Treasurers, and Finance leaders working in international companies who are interested in understanding the landscape they are operating in and want to stay up-to-date with developments.

Meet the speakers

jukka_round

Jukka Sallinen

Deputy CEO, Nomentia

Jukka is a cash management domain expert with a strong hands-on background from international and complex payment factory and SWIFT projects. Previously, Jukka has been working in various R&D roles, focusing on bank and ERP integrations and security topics.

 

 

 

David Kelin

David Kelin

Owner, DNA Treasury Ltd

David Kelin possesses invaluable commercial experience gained from over 35 years working in leading organizations in the areas of liquidity, treasury, and cash management. He has a keen interest in treasury technology and has written many articles on the topic. David owns and manages DNA Treasury Ltd where he provides advice to corporates and banks on treasury and liquidity. He has worked with 100’s of companies. He also runs a treasury training company which has developed courses and trained over 1,000 treasury professionals over the years.

 

About Nomentia

Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!

Pinpointing oil and gas sector Risks

14-12-2020 | treasuryXL | Refinitiv |

The oil and gas sector is under greater regulatory scrutiny, with record fines for financial crime-related violations. How is robust and thorough risk screening helping companies across the industry to pinpoint and protect against a range of potential risks?
  1. Screening and related due diligence tools are essential in the oil and gas sector for pinpointing and exposing potential risks early in the game.
  2. In the highly regulated upstream industry of exploration and drilling, risks include sanctions violations, bribery, corruption, and environmental crime.
  3. Refinitiv’s World-Check Risk Intelligence database comprises over four million structured records, enabling robust and accurate screening of both entities and individuals.

The oil and gas sector has been on the receiving end of some of the largest regulatory fines on record in recent years. Our Expert Talk, Drilling down: Oil and gas supply chain risk, written by Refinitiv’s Renata Galvao, takes a look at the sector and its unique challenges.

One of the highest profile was the US$853.2 million levied in 2018 against Brazilian state oil company, Petróleo Brasileiro SA, under the U.S. Foreign Corrupt Practices Act in the so-called Car Wash bribery scandal. While figures such as these are eye-wateringly high, the reputational fallout of any association with financial or environmental crime can be far more devastating. It is therefore imperative that organizations operating in the oil and gas sector take adequate measures to screen for, and mitigate, the wide range of risks to which they may be exposed within often vast, global supply chains.

Oil and gas sector risks

Organizations in the oil and gas sector — whether they are involved in upstream, midstream or downstream activities — face a range of risks and challenges. The highly regulated upstream industry — incorporating exploration and drilling — paid the largest share of all settlements for breaching Office of Foreign Assets Control sanctions in the period 2011-2019. Many oil-rich territories are situated in jurisdictions characterized by political uncertainty, and consequently organizations must contend with high levels of risk relating to bribery and corruption.  There is also exposure to a number of hidden risks, such as those related to terrorism financing and engagement with armed rebel groups.

The midstream industry — including transportation, storage and wholesale marketing — also faces a range of risks, including the financial, regulatory and reputational fallout associated with accidents such as spills, explosions, and leaks. Environmental regulations governing such issues are stringent, with penalties including both fines and imprisonment where criminal charges are brought against negligent individuals. Moreover, midstream organizations using sea transportation must be able to verify the beneficial ownership of all vessels used, as any links to criminal activity such as smuggling at sea, the illicit transportation of contraband and narcotics, or human trafficking must be identified.

The downstream industry — refining, processing, marketing and distribution — in turn is exposed to significant third-party risk from both the upstream and midstream industries. Oil theft is becoming a growing concern, and therefore understanding the source of crude and the legitimacy of the product are fundamental areas of focus for this sector. Downstream companies are also subject to growing environmental controls, with ever-more stringent national regulations monitoring and restricting the levels of pollution that refineries are allowed to emit.

Mitigating risk in global supply chains

Given this vast range of potential risks, screening and related due diligence are widely regarded as key tools to pinpoint and expose potential risk early in the game.

Refinitiv’s market-leading World-Check Risk Intelligence database can provide invaluable support to compliance teams by enabling them to conduct robust and accurate screening of both entities and individuals. World-Check One, our essential screening platform, further offers a range of specific opt-in tools, including:

  • Media Check to enable targeted searching for negative news and web articles, both current and historical, relating to individuals and entities.
  • UBO Check, which allows users to identify the ultimate beneficial owners of entities and then screen them against World-Check Risk Intelligence on a single platform.
  • Vessel Check, which reveals potential risk related to sanctioned or embargoed vessels and sea ports.

Additionally, where heightened risk is suspected, our Enhanced Due Diligence reports deliver targeted insights into potential business relationships, enabling companies to form a holistic view of potential risk before entering a new market or beginning a new relationship.

By investing in the right screening tools and technology, companies in the oil and gas sector can pinpoint, expose and mitigate risk in global supply chains, and in so doing protect themselves from the ever-growing threat of severe financial, regulatory and reputational fallout that has dogged the sector in the recent past.

 

How does the FATF help fight financial crime?

01-12-2020 | treasuryXL | Refinitiv |

The Financial Action Task Force (FATF) plays a crucial role in the global fight against crime, corruption and terrorism through its Mutual Evaluation assessment. How has the FATF evolved since its birth 31 years ago, and what role does it play in anti-money laundering (AML) and countering the financing of terrorism (CFT)?

  1. The FATF is an intergovernmental body that oversees global efforts to combat money laundering and the financing of terrorism.
  2. To become part of the FATF group, a country must undergo a ‘Mutual Peer Review’ to determine its levels of compliance with FATF’s Recommendations.
  3. The FATF’s methodology change, introducing the Effectiveness Assessment, is yielding more accurate results of a jurisdiction’s levels of compliance with its AML/CFT global standard.

The FATF is an inter-governmental body that was established in 1989 by the G7 nations to combat money laundering. For the first 12 years, of its existence it was a little-known organization. However, it came to prominence after 9/11 when its mandate was expanded to include additional Recommendations to combat the financing of terrorism and the financing of the proliferation of weapons of mass destruction. Since then, the FATF mandate and Recommendations have been endorsed by different UN resolutions, and it has been transformed to adapt to different emerging threats. In 2008, after the global financial crisis, FATF’s role as an international standard policy-making body in AML and CFT was expanded by the G20. It was given the ‘soft power’ to generate the necessary political will to bring about legislative and regulatory reforms in countries.

The FATF Mutual Peer Review

Countries wishing to become members of the FATF group must commit to a ‘Mutual Peer Review’ system. This will determine the country’s levels of deployment and compliance with the FATF Recommendations, which have been set as the international AML/CFT standard. The FATF oversees these reviews in conjunction with different international members and observers such as the IMF, the World Bank, the OECD, and the European Commission.                                                                                       
In addition to the information received from the assessment team performing the review, the FATF Mutual Evaluation’s Effectiveness Assessment also considers information from the FATF team that visits the country being evaluated. The Mutual Evaluation team comprises highly trained experts drawn from FATF member countries and international bodies.

 

Recommendations focus on effectiveness

Until 2013, the results of the FATF review were largely focused on the technical implementation of the Recommendations into the local legislations. However, because of the high levels of money laundering (ML) and financing of terrorism (FT) globally, the FATF decided to enhance its methodology to focus more on effectiveness rather than just technical compliance. This revised methodology helped to produce the expected tangible results in the fight against AML/CFT. It shed light on many countries that had previously been evaluated, but who under the new methodology began to show serious weaknesses in the fight against ML and FT. This resulted in the number of countries and jurisdictions on the FATF Grey List — those who were placed under increased monitoring — to start growing.

The FATF Mutual Evaluation employs peer pressure from other countries, as well as bodies such as the IMF and the World Bank, which impels the assessed countries to act. Negative mutual evaluation outcomes not only seriously damage the reputation of the assessed countries and embarrass its governments, but might also generate replicated systemic risks of coercion by other international institutions such as the European Commission. And the new methodology is working. In recent years, the Effectiveness Assessment is yielding more accurate results of a jurisdiction’s levels of compliance with FATF’s AML/CFT global standard. Many jurisdictions are now finally realizing the coercive power of the Mutual Assessment.

New evaluation methodology

The fourth round of Mutual Evaluations from FATF continued the shift towards concentrating on how effectively regulations are deployed rather than mainly focusing on technical compliance and whether country laws and regulations are in place in accordance with the FATF Recommendations.

This can be very challenging for a number of countries in many sectors, including some that have previously been assessed to be complying with the standards before the introduction of this new evaluation methodology.

The pressure to ensure that legislation was changed and that industry sectors complied with the Recommendations was achieved by targeting the industry sectors that posed the highest AML/CFT risk. At least this was the case in the Middle East and Africa. The early years concentrated on the banking and financial sectors, including the capital markets. This focus was later broadened to non-banking remittances and payments organizations and money exchanges. This was followed by the insurance sector and so on.

Non-financial sectors under the spotlight

The last few years has seen Mutual Evaluation reports focus on the designated non-financial business and professions (DNFBPs) sectors — real estate, lawyers, accountants, gold and precious stone dealers, for example — that had been previously overlooked area by past evaluations. For example, the EU Fifth Anti-Money Laundering Directive, which came into effect in January 2020, further strengthened its AML/CFT legislation to fall in line with the FATF, when it included a number of new sectors.

The non-financial sector often has the misconception that AML/CFT regulations are solely for the banking and financial sectors. A key shortcoming identified by FATF across many jurisdictions in emerging markets is that DNFBPs are falling short of FATF expectations. Recent evaluation reports from several countries show that DNFBPs have less comprehensive, and sometimes limited or no understanding, of AML/CFT regulations and the risks that they are facing.

However, the new approach of measuring effectiveness rather than technical compliance might keep many countries’ institutions and companies to consider: “Are our sanctions and transactions screening just a checklist process, or do they show the real effectiveness of our AML/CFT risk process as defined by FATF?”

Nomentia Webinar: Building the Bridge Between Treasury & Finance: Communication, Collaboration, Technology

| 18-11-2020 | treasuryXL | OpusCapita |

Finance & Treasury leaders are being challenged to become more engaged in driving results across the enterprise. This requires alignment across the Office of the CFO before these leaders can have success in impacting performance in HR, Operations, Marketing and Sales. How can treasury & finance leaders identify and mitigate barriers to effective communication and collaboration to maximize the value delivered by the Office of the CFO?

Join us to discover how to earn trust within and across departmental lines, and up and down the org chart at your company.

We will empower you to:

? Identify the skills you possess and/or need to develop to build deeper mutually beneficial relationships within and across departmental lines.

?Leverage technology to communicate with impact in any business environment.

?Raise your IQ relative to how and why treasury & finance work at your company.

?Define opportunities to impact the performance of your colleagues in treasury & finance at your company.

REGISTER NOW

About Nomentia

Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!

Treasury Delta’s corporate treasury RFP platform: How does it work and why collaborate?

| 18-11-2020 | treasuryXL | Treasury Delta | Having a hard time dealing with complex and time-consuming RFP processes?

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