Trade gap widening due to cost and complexity of compliances says ICC

The International Chamber of Commerce (ICC) Banking Commission has released a report that highlights a widening trade finance gap driven by the cost or complexity of know your customer (KYC) and anti-money laundering (AML) compliance.

The results of the ICC’s 2015 Global Survey on trade finance indicate that the impact of the trade finance gap is greatest on small- and medium-sized enterprises (SMEs).

SME impact

The survey received 482 responses from 112 countries around the world and showed that SMEs account for nearly 53% of all rejected trade finance transactions. By contrast, 79% of the trade finance transactions for larger corporates are accepted.

The trade finance gap is highlighted throughout the survey, with compliance cited as a chief barrier to trade finance.

Correspondents terminated

Nearly 46% of the banks surveyed terminated correspondent relationships due to the cost or complexity of compliance, while 70% of respondents reported declining transactions due to AML and KYC requirements.

The percentage of respondents citing anti-financial crimes compliance requirements as a significant impediment to trade finance has increased from 69% last year, to 80% in this year’s survey.

Ongoing trend

This trend is expected to continue, as nearly all (93%) of respondents expect compliance requirements to increase during 2015.

The survey also looks at the impact of regulation on correspondent banking, as well as positive trade finance trends, particularly with regards to export finance.

More information on the survey can be found here, where the full version of the ICC’s 2015 Global Trade Survey can also be downloaded in PDF format.



Categories: Trade Based Financial crimes News

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