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Preparing for the compliance challenge of real-time, cross-border payments

Compliance teams play a critical role in real-time, cross-border payments, facilitating greater levels of trust, transparency and collaboration while mitigating risk.

In today’s fast-paced world, we expect everything to happen immediately. Businesses can operate rapidly and nimbly on a global scale – and they expect the same from their banking partners.

Payments need to be real-time. Numerous domestic payment schemes already allow beneficiaries to receive and access funds in real-time, and many operate in 24/7 settlement models.

Cross-border payments are rapidly catching up, with many transactions now being processed in just minutes, or even seconds. But achieving real-time is even more challenging when sending payments internationally, as it involves bridging multiple currency systems and regulatory jurisdictions.

Real time is a call to action for compliance and payments to join forces and prepare for tomorrow’s challenges

So what does this mean for compliance?

With up to 10% of cross-border payments still held for review, the compliance function is evolving to support real-time, compliant cross-border payments.

Follow these five steps to get ready to support real-time payments.

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Are you ready for real time? Compliance challenge of cross-border payments

1. Build trust

A strong network of global correspondent relationships is the cornerstone of real-time, cross-border payments. Compliance teams can also seek to play a more central role in facilitating wider and deeper correspondent relationships across the globe, as well as managing risk effectively.

Real-time Financial Crime Compliance, The meaning of KYC
Boost data quality

2. Boost data quality

Real-time payments depend on banks having clean, complete and correctly formatted payment data. Likewise, all downstream compliance processes – including sanctions screening, KYC and transaction monitoring – can only be effective if the information included in payment messages is accurate. Compliance will need to work even more closely with payment teams to assess and improve the quality and accuracy of their payment data.

3. Protect against fraud

If a payment is settled immediately, the opportunity for recovery is greatly reduced. At the same time, criminals may seek to exploit the convenience offered by faster payments for fraud and money laundering purposes. Compliance teams need to take a proactive approach to building a robust institutional fraud detection and prevention framework.

[ebook] Fighting institutional cyber payments fraud in an evolving payments landscape
Protect against fraud
Embrace shared solutions

4. Embrace shared solutions

As global sanctions increase in complexity, regulators expect financial institutions to show they are actively addressing these challenges. Compliance teams need to strike a careful balance, ensuring the improvements in customer experience delivered by real-time payments don’t compromise their compliance.

Real-time has facilitated greater collaboration to support straight-through processing. These shared approaches have the potential to further benefit the effectiveness of compliance processes.

Read more: Embrace shared solutions to meet the new reality of instant payments

5. Future-proof your processes

The new world of real time will bring the dual benefits of increased transparency and better data, as well as providing opportunities for closer collaboration.

By fully leveraging the investments and technologies that are facilitating real time, new opportunities for innovation are emerging. These will drive greater efficiencies in compliance and support the fight against financial crime.

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