Banks are increasingly asking for more visibility into the trading activities of GCC companies, according to Accuity, a global payment efficiency and compliance provider.
As local firms seek to export their products overseas, they will have to comply with an upcoming global regulation that aims to prevent money laundering. In addition, they will need to take into account the Wests know-your-customer policies, which are prompting global lenders, insurers and export credit agencies (ECAs) to demand detailed information on the parties involved in transactions.
Better visibility is needed all the way down the chain, from raw materials extraction to distribution, management and provision, according to Robert McKay, Accuitys managing director.
It is not uncommon for the underwriting of a shipment of legitimate goods to help pay for the shipment of perhaps illicit goods on the same vessel, he says. [Banks want to know] what ways there are of identifying this. Sometimes, it is not the company having the issues but rather the distribution partner and the control they have in ports of call they made. There is a lot of attention on what the regions hydrocarbons vessels are transporting and what routes they are taking.
It is also about looking for dual-use goods. Circuit boards used for switching mechanisms might be quite common, relatively benign materials in the West, but could also be used for weaponising a warhead.
Increasing levels of trade between firms from this region and the West is driving a more inward look.
The concerns have led to increased demand for better visibity when it comes to company structures, how subsidiaries are run and operated, as well as the activities of trading partners, he says.
On the financial side, lenders are looking at ways to increase transparency in payment flows, says Frank Hamer, head of global transaction banking at National Bank of Abu Dhabi (NBAD), which is looking to expand its presence in Asia. Rather than regulation, there is a lot of encouragement for automatisation, he says. One improvement would be to classify where payments are going and in what currency, to get a better understanding of economic flows.