ICC Financial Crime Risk & Policy Group issue 2 Policy Statements


The ICC has recently issued 2 Policy Statements from the Financial Crime Risk & Policy Group.

How Does Global Trade and Receivables Finance Mitigate against Proliferation Financing?

This paper considers the application of a risk-based approach to assist Financial Institutions (FIs) in identifying high-risk customers and transactions in relation to Proliferation Finance (PF) related to Weapons of Mass Destruction (WMD). 

The paper can be found here Mitigation against Proliferation Financing.pdf

Financial Crime Compliance Checks on the Price of Goods in Trade Transactions – Are Price Checking Controls Plausible?

This paper outlines the various potential methods for checking the price of goods, and their feasibility, demonstrating that there are significant difficulties in implementing effective price checking for Trade Finance transactions:

- Price Checking, beyond a common sense check for manifestly unusual pricing, is extremely challenging for Financial Institutions to carry out when processing trade documentation.

- It is not plausible for a Financial Institution to develop a binary financial crime control for price checking and automated systems have, to date, not proved to be effective.

- Even where publically available pricing information is available (such as for commodities) price checking remains challenging due to the multiple factors which constitute the final price of the underlying commodity in a transaction

The paper can be found here Financial Crime compliance checks on price of goods.pdf

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Latest Question

I refer to UCP 600 sub-article 7 (c) which indicates that "An issuing bank undertakes to reimburse a nominated bank that honoured or negotiated a complying presentaation ….." My interpretation of this article is the following: If a nominated bank honours or negotiates a complying presentation and duly forwards the documents to the issuing bank, the issuing bank takes the firm commitment to pay the nominated bank even if the seller-beneficiary of the L/C has previously issued an assignment of proceeds in favour of a third party and that this assignment of proceeds has been accepted by the issuing bank and notified to the third party. I would say that in such a situation, the nominated bank has no need to request any assignment of proceeds as there is a direct firm commitment from the issuing bank to pay them. 1) Do you agree with me ? 2) If the beneficiary of the L/C has issued an assignment of proceeds in favour of a third party, and this assignment has been accepted by the issuing bank, will the issuing bank pay this third party whereas it has already paid the nominated bank? (normally according to sib-article 7 (c) "the issuing bank undertaking to reimburse the nominated bank is independent of the issuing bank undertaking to the beneficiary". Let me have your advice. 3) If we consider the same situation, but we suppose that the bank which negotiates or honours a complying presentation is not a nominated bank, then there is no direct undertaking to pay that bank, which means that the bank has every interest to obtain an assignment of proceeds from the beneficiary of the L/C otherwise if an assigment of proceeds has been made by the beneficiary of the L/C in favour of somebody else, the negotiating bank will not be paid by the issuing bank. Do you agree with me?