Accuity Managing Director Bob McKay recently sat down with Bank Systems & Technology to discuss the dangers and risks in trade finance. According to McKay, trade finance is an ideal target for criminals, mainly because banks continue to rely on manual processes for compliance screening in their trade departments.
“If you’re a criminal, it’s understandable to look at trade finance as an opportunity. Screening is still paper-based, and most of it is done post-facto,” McKay said.
This is where an automated screening process could come in handy, according to McKay. Just last year, the U.K. released a white paper that explained how financial institutions could improve their trade finance screening. It will likely not be long before other countries eventually follow suit, McKay said.
“These are typically your core corporate customers that you’re dealing with,” McKay told the news source, referring to trade finance as a market where profit margins are still high because margins in other businesses are being squeezed. “Most trade finance is happening through open accounts. I expect to see banks becoming more diligent about those customers… and raise the importance of understanding them for compliance.”
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