For more than 50 years, executing risk rules, standard operating procedures (SOPs) and compliance regulations for cross-border payments has been a slow, expensive, error-prone manual process—largely conducted by Originating Institutions but exposing Clearing Institutions to extreme regulatory risk.
Without visibility into the “who,” “why,” “source of funds” and sanctions checks performed, Clearing Institutions are vulnerable because they’re dependent on Originating Institutions to establish transaction legitimacy to prevent money laundering, terrorist financing and other nefarious activities. Yet, they’re unable to directly execute their own anti-money laundering, terrorist financing, Know Your Customer and other compliance and risk mitigation procedures because they lack access to the data.
For their part, Originating Institutions’ core banking systems don’t have the tools to capture, analyze and act on the data to ensure the safety and soundness of international money transfers. Nor can they share the data, documents and artifacts with Clearing Institutions to enable them to mitigate their risk. And, Clearing Institutions don’t have the ability to automate risk management, standard operating procedures and compliance rules to conduct pre-transaction Know Your Transaction. Collectively, these deficiencies have pushed regulators to classify cross-border payments as high risk and press Originating Institutions to derisk by exiting the business.
In addition, the inability of Originating Institutions to fully automate their processes within their compliance and core bank systems means a wide variety of necessary tasks are performed manually, making them slow, expensive, error-prone and—importantly—frequently at odds with process documentation provided to regulators. Audits and exams expose these procedural inconsistencies, leading to fines, sanctions and, in some jurisdictions, criminal penalties for financial institution executives, along with further pressure for Originating Institutions to exit cross-border payments.
But now, Payall automates data and document collection and pre-transaction application of risk rules, SOPs and compliance requirement at the transaction level, specifically for cross-border payments for both Originating Institutions and Clearing Institutions. This enables Originating Institutions to easily collect, retain and share details that establish transaction legitimacy and incorporate Clearing Institution rules and requirements into the authorization process. It also gives Clearing Institutions full visibility into the data, documents and artifacts backing each transaction for informed, automated decision making and access to full transaction details to breeze through internal audits and regulatory exams.