Now more than ever, treasurers need to take action to reduce the risks around payments – especially when it comes to sanctions compliance. Here, Joerg Wiemer, CEO, Treasury Intelligence Solutions (TIS) GmbH explains how centralising sanctions screening, and integrating it into the payment process, can help to keep corporates safe from compliance breaches.
Eleanor Hill, TMI (EH): Why are treasurers losing sleep over payments? What pain points do they typically face?
Joerg Wiemer, TIS (JW): As I learnt in my former life as a corporate treasurer, orchestrating a payments process is surprisingly painful. Generally speaking, the costs are relatively high, as are the risks, and transparency is low. Although initiatives such as SWIFT gpi are addressing some of these issues, the risk element is still causing headaches for many treasurers.
Before treasury pays a supplier, it has to make sure the beneficiary has been thoroughly screened. This is not a one-off process; it’s continual – government-imposed embargoes and sanctions on who companies can trade with and how, are changing almost daily. What’s more, regulations in this area are increasing, with the EU and US, among others, issuing tough legislation to control money laundering and terrorist financing. The treasurer, together with the CFO, is therefore becoming personally responsible for any compliance breaches relating to payments.
EH: Could you outline some of the consequences of non-compliance? What are the risks?
JW: Along with the personal risks, which could see individuals incarcerated, the financial penalties for non-compliance are a major cause of sleepless nights, especially since regulators have imposed heavy fines in recent years (see Fig. 1).