Transparency iStock_000026046602MediumEarlier this month, the fourth of five events in FCIB’s European Roundtable series on the topic of Compliance & Ethics (C & E) was held in Amsterdam.  FCIB approached the topic from a credit risk perspective with a focus on the “KYC” element (Know your Customer) of the compliance policy. Those corporates with an American “parent” were more aware of KYC culture and its impact on deterring issues like money laundering and terrorist financing, whilst others were divided on who was responsible within their companies.

Some member corporates based within European Union nations were not quite as familiar with current legislation and, in particular, the EU 4th directive.  Broadly speaking, the EU Commission has adopted two proposals therein to update and improve the EU’s existing legal framework designed to protect the financial system against money laundering and terrorist financing. That said, the 4th directive has not been widely disseminated as yet and, in many cases, assumptions seem to have been made that this would be handled by in-house legal teams or a chief compliance officer, rather than credit managers there.

During the interactive programs, some of the key principles of the KYC element of C&E included the following:

  • Screening of customer’s company ownership, such as directors’ addresses.
  • Knowing where the goods’ final destination is.
  • Keeping everyone on the credit team familiar with things like embargo and sanction lists.
  • Knowing where payments are coming from.
  • Dealing with third-party payments.

The five-event series that began in September in London will culminate with the final event in Zurich on February 13.

Source:  National Association of Credit Management (NACM) Brian Shappell, Staff Writer

BIIA Comment:  “Knowing where payments are coming from”.  This year one of our industry members got embroiled in a fraud case where a bogus company was set up in the US to obtain access to sensitive US consumer data.  The industry member’s subsidiary failed to check whether the new customer was real and ignored the fact that payments for data purchases came from an Asian country.