New initiative aims to remove AML and KYC barriers to trade finance for African SMEs

A new initiative supported by the German government aims to reduce the compliance burden associated with stringent anti-money laundering (AML) and know your customer (KYC) regulations and enable small- and medium-sized enterprises (SMEs), especially in Africa, to apply for trade finance.

The collaborative initiative aims to equip SMEs across Africa with globally recognised business identities, in the form of legal entity identifiers (LEIs) that are comparable to an international company ID card.

Verification and trust

The LEIs contain ownership structure information about a legal entity which can be verified quickly and efficiently by anyone, anywhere, enabling organisations to know precisely with whom they are doing business.

The verifiable company data aims to provide transparency in the marketplace and build greater trust between market participants.

Strengthening financial inclusion

Supplying LEIs to African SMEs aims to strengthen financial inclusion in the region by enabling them to apply for trade finance and establish contractual, regulated agreements with banks, payment networks and trading partners, leading to broader access to financial services and greater participation in both domestic and international markets.

By working with African banks to enable them to issue LEIs, the initiative aims to overcome the AML and KYC regulations that routinely prevent banks from lending to new African SMEs due, in large part, to ID validation and verification difficulties.

LEI collaboration

The LEI initiative is a collaborative effort with the Global Legal Entity Identifier Foundation (GLEIF), a not-for-profit founded by the G20 and Financial Stability Board, managing the global network of LEI issuing organisations.

London Stock Exchange Group is the initiative’s initial LEI issuing organisation while Zimbabwe’s NMB Bank is equipping local SME customers with LEIs.

The initiative also involves the Centre for Financial Regulation and Inclusion, an independent, not-for-profit think tank which works on African financial sector development and Cornerstone Advisory, which specialises in financial sector advisory and training services.


Categories: Trade Based Financial crimes News

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