BAFT, an international financial services association, has issued new guidelines for identifying potentially suspicious activity in letters of credit and documentary collections.
The guidance, developed by BAFT’s Best Practices Anti-Money Laundering (AML) Know Your Customer (KYC) working group, is designed to assist the international banking industry when combatting money laundering and financial crime.
The Best Practices AML KYC working group consists of product and compliance practitioners from 16 financial institutions and industry suppliers from the US, Canada, Asia and Europe. The BAFT Global Trade Industry Council made up of senior leaders in global trade finance, formed the group to meet the needs of the transaction banking industry. The guideline is the first output from the group.
The BAFT working group reviewed the red flags and risk indicators identified by various industry bodies including the Federal Financial Institutions Examination Council, Financial Action Task Force, the Wolfsberg Group and the Financial Conduct Authority to provide clarity for international banks to consider when implementing trade compliance policies.
BAFT combined the key points from the above groups into 16 red flags to raise banks’ awareness of what to look for to assess suspicious activity in trade transactions.
“One of the challenges banks face with implementing global compliance policies is trying to interpret guidance from multiple industry bodies,” says Tod Burwell, BAFT president and CEO. “This document aims to simplify guidance from a variety of regulatory and standard setting authorities in a way that facilitates more effective policies and procedures.”
