TRADE FINANCE, REGULATION, AUDIT AND CONTROL (TRAC)

In the past year, two major regulatory guidelines have been released by the MAS in Singapore and the HKMA in Hong Kong, forcing trade finance operations to take new actions to ensure they are not financing any illicit transactions. To comply with these regulatory guidelines, banks are now required to add the following due diligence steps to their trade finance operations process:

• Screen the trading partners or counterparties of the customer (including buyers, sellers, shippers, consignees, notifying parties, shipping agents, etc.)

• Check the nature of the goods traded, and identify any Dual Use Goods

• Check the country or countries of origin of the goods (including whether the goods originate from any sanctioned country)

• Check the flag of the vessel, flag history and name history (to check whether it is related to any country in the list of sanctioned countries)

• Request the name and unique identification number (e.g. International Maritime Organization “IMO” number) of any vessel proposed to be used (e.g. to better identify if it is ultimately owned by a sanctioned party)

• Check the name of the beneficial owner, commercial operator and registered owner of the vessel involved in the transaction to trace the history of former ship owners with focus on country of residence

• Check the port of loading, ports-of-call and port of discharge (including whether the goods originate from, or are sold to any sanctioned country) and the trade routes proposed to be used

• Verify market prices of goods such as commodities to assess if further information should be obtained where the contract price differs significantly from the market price to mitigate financial crime risk.

Thomson Reuters has launched an end to end solution aimed at more efficiency in trade finance operations, enabling banks to screen trades at all the stages of the trade cycle:

• pre-trade pricing validation and third party screening

• shipment tracking

• on-going screening and automated post-trade reporting.

Thomson Reuters Trade Finance, Regulation, Audit and Control (TRAC) helps banks ensure they thoroughly comply with evolving Trade Finance guidelines and regulations, while limiting the cost of compliance.

WHAT CAN THOMSON REUTERS TRAC DO FOR YOU?• Simplify the Due Diligence process for Trade Finance with a

single workflow• Screen the trading partners and counterparties with

Thomson Reuters World-Check, including buyers, sellers, shippers, agents and vessels

• Verify the nature of the Goods traded leveraging our harmonised list of Dual Use Goods (DUG)

• Check the flag of the vessel, including history and confirm match with the IMO number

• Access commodity, freight and FX prices to validate the value of the trade financed

• Track shipments more easily with real time visibility on ships’ trajectories and stops including historical routes using Thomson Reuters interactive maps

• Increase cost efficiency in the Trade Finance Compliance processes• Increase transparency and facilitate audits• Lower your risk of facing fines and/or reputational damages

for failing to comply with Trade Finance regulations, thanks to automated and transparent due diligence processes.

WHAT RISKS DOES THOMSON REUTERS TRAC HELP MITIGATE?• Trade Based Money Laundering (TBML)• Fraud• Financing of Terrorism• Arms Trafficking/ Proliferation• Sanctions Violations

Trade Finance Regulations Overview: A recent report from Global Financial Integrity (GFI) suggests that 80% of illicit financial flows from developing countries are made through Trade Based Money Laundering (TBML).

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© 2016 Thomson Reuters. 686613408/10-16.