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Industry roundup: 15 December

Global supply chain disruptions on various business sectors

Citi’s report called Global Supply Chains: The Complicated Road Back to "Normal" outlines the supply chain challenges that have resulted from the COVID 19 pandemic and highlights the sectors that have been most impacted and the plans for recovery.

The findings of the report detail the supply chain disruptions during the pandemic that include supply chain management practices, shifts in consumption towards goods, monetary and financial incentives by the public sector to boost aggregate demand, the emergence of variants, and commodity surprises that have increased supply pressure. Additionally, it recognizes the speed of supply chain issues that spread around the globe.

Nathan Sheets, Global Chief Economist, Citi, commented that the pandemic has led to a sustained replacement of consumer spending towards commodities. Coupled with considerable macroeconomic incentives, this has been the driving force on demand for goods that far exceed supply in many sectors. The recovery from the pandemic and economic support measures have created a situation where demand for commodities far exceeds supply. As a result, the supply-side disruptions are partially due to companies attempting to catch up on their business functions.

The report further states that supply chain pressures no longer worsen. However, there are no major improvements at this time. It states that the global inventory system was not designed to address the fluctuations of demand and production caused by the pandemic. Furthermore, the ongoing global vaccination promotion will positively impact and bring a reduction in supply chain issues.

Shahmir Khaliq, Global Head of Treasury and Trade Solutions, Citi, commented that global supply chain disruptions are the consequences of several events, such as national lockdowns, port congestion, labor and energy shortages, in addition to heightened geopolitical pressures. There is an imbalance between market supply and demand as borders reopen around the world, lift restrictions and recommence manufacturing operations. Therefore, suppliers struggle to cope with demand from the reopened economy.


BBVA Switzerland becomes first traditional bank in Europe to incorporate Ethereum into its service

BBVA Switzerland, the Swiss franchise of the Spanish multinational financial services institution, BBVA, expanded its cryptocurrency custody and trading services to include Ethereum (ETH) to its asset portfolio services. BBVA is the first traditional bank in Europe to establish Ethereum into its current investment product services. According to BBVA Swiss, the private banking customers and New Gen account holders will have access to Bitcoin and Ethereum on the platform.

The New Gen account is BBVA’s latest online investment account in Switzerland. Customers with a New Gen account will be able to access bitcoin (BTC) and Ethereum (ETH) on the BBVA app in addition to traditional investments. Moreover, customers will not only be able to open a multi-currency account 100% online in just 15 minutes, they will also be able to invest from Switzerland with the best rates in the market and choose from over fifty investment preferential notions in an easy and secure environment.

BBVA Swiss has realized a substantial increase in client interest since establishing Bitcoin trading services for all private banking clients in June 2021. BBVA Swiss intends to meet the increased demand for the variety of cryptocurrencies with the addition of Ethereum.

Alfonso Gómez, the CEO, BBVA Switzerland, commented that the steady roll-out has enabled BBVA Switzerland to examine the product's operations, reinforce security and, most of all, observe any noteworthy interest from investors for digital crypto-assets as a means of diversification to their portfolios, notwithstanding volatility and potential high risk.

The market capitalization of digital currencies rose by nearly 200% in 2021. Alternative Coin (Altcoin), another platform of innovative capabilities, is becoming much more popular in addition to Bitcoin. Subsequently, investors are leaning towards a diverse crypto portfolio.

Bitcoin management system is fully integrated into the app where customers can easily view their assets, funds and investment performance, an important advantage in the market according to BBVA Swiss. In addition, this service represents a new type of product solution where traditional and digital financial assets can be invested and integrated in the same investment portfolio, simplifying trading, bank statements, tax return information and other transactional details.

BBVA Switzerland plans to further expand its portfolio of digital assets into new countries in the upcoming months. However, it is dependent on market conditions in terms of maturity, demand and regulation.


Anti-money laundering (AML) solutions expand into the Baltic region of Europe: Partnership between Sentinels and PAYSTRAX

PAYSTRAX, a financial technology company and licensed payment institution supervised by the Bank of Lithuania, partnered with Sentinels, Europe’s intelligent transaction monitoring platform, to improve the current anti-money laundering (AML) processes for payment services in Europe and to protect businesses from the demanding regulatory procedures in Lithuania.

According to PAYSTRAX, Sentinels is a flexible platform that provides simple, customizable rule-based notifications and data-driven insights in real time. This would minimize inaccurate test results generated by the system and provide a more comprehensive overview of the risks of the entire transaction.

Furthermore, the partnership will enable PAYSTRAX’s compliance analysts to identify suspicious transactions more accurately, quickly and efficiently, significantly reducing customer risk and ultimately eliminating money laundering activities from its processing services.

Cybercrime and payment fraud continue to grow at high speeds for payment service providers and merchants across the industry, commented Joost van Houten, CEO, Sentinels. In order to assist organizations in eliminating unlawful activities, Sentinels’ self-improvement operations utilize a combination of business rules and machine learning algorithms, eliminating the need to spend money and time on inaccurate notifications. Houten further stated that the partnership will help improve AML detection rates and meet Lithuanian regulatory compliance.

Regulators around the world have different requirements that affect transaction monitoring and SAR filing. However, the rapid changes in the financial sector, driven by the digitization of payment transactions and the overall growth of payment providers, have tightened the overall regulatory sector. Lithuania has recently renewed its regulatory environment to mitigate the economic and social damage caused by money laundering and terrorist financing.
PAYSTRAX ensures its transaction monitoring capabilities are compliant with AML laws in Europe and Lithuania, meeting the regulatory reporting requirements of its supervising authority, the Bank of Lithuania. Johannes Kolbeinsson, CEO and co-founder, PAYSTRAX, further added that providing customers with the security of a multi-tiered fraud prevention technology, supported by a team of risk experts, will help in reducing the number of transaction monitoring alerts while achieving a quicker update on fraudulent transactions according to Lithuanian regulations.


Cryptocurrency advancements into the banking sector: Finasta and Liquid partner to offer solutions in the banking space

Finastra, an innovative financial services technology company, and Liquid, one of the world's largest cryptocurrency-fiat exchange platforms serving millions of customers globally (founded in 2014), signed an arrangement to enable integrated cryptocurrencies for banks. Both Finastra and Liquid have partnered to make Liquid's Quick Exchange (QEX) app available from Finastra's open developer platform and app store By integrating with Finastra's core banking solution, Fusion Essence, QEX will enable banks to respond to growing interest in cryptocurrencies by providing services such as purchases, exchanges and payments.

With QEX, bank customers have access to over 150 cryptocurrencies, making it easy, fast and secure to buy and trade instantaneously. Customers will benefit from Liquid's highly competitive pricing structure, and the platform will provide traders with the ability to lock low minimum order requirements and transaction prices for up to two minutes. The platform can be easily integrated with Finastra's core banking solution Fusion Essence via an open API, and its low-friction KYC process helps banks keep their customers in the ecosystem. Customers can access the emerging crypto market without leaving the familiar and trusted banking environment through this system.

There is growing interest in investing in cryptocurrencies, and forward-thinking banks are trying to meet this demand in order to gain a competitive advantage, commented Mike Kayamori, CEO, Liquid. Furthermore, Kayamori added that the availability of QEX on signifies that hundreds of banks around the world can quickly and seamlessly provide cryptocurrency services to their customers. The core financial solution Fusion Essence also offers many benefits such as data and analytics capabilities, which makes Finastra the right partner to support more banks in their entry into the crypto space.

According to Finastra, progressively more people are transferring their fiat currencies from banks and investing them in crypto assets. Eli Rossner, Chief Technical Officer, Finastra, further added that QEX offers banks the opportunity to profit from these transactions and perhaps even attract new account holders, rather than simply losing this capital.

QEX also leverages the trustworthy brands and relationships that banks have built over the years to enable them to offer crypto services in a familiar environment. This poses opportunities for captivating the business of inquisitive but cautious investors.

Finastra stated that as a digital architecture innovator, the goal is to bring together partners to meet customers' needs. The partnership with Liquid will help to expand cryptocurrency services accessibility into the retail banking space.


Real-time payment and verification solutions for US-based clients: Citi introduces Present and Pay Service

The evolution of digitalization continues with efforts to improve customer services. Citi’s Treasury and Trade Solutions (TTS) has improved Citi Present and Pay, an electronic bill presentment and payment platform for institutional billers in the United States.

Some of the new features include Citi® Verify, a real-time account verification tool, and electronic bill (eBill) distribution capabilities via Request for Pay (RfP) messaging over the RTP network and The Clearing House real-time payment system. Michael Fossaceca, North America Region Head, Citi Treasury and Trade Solutions, commented that financial service providers are progressively focused on enhancing customers' end-user experience with integrated multi-channel and simple solutions that offer more options and convenience with flexible payment selections.

Citi Present and Pay is an omni-channel electronic bill presentment and payment platform that allows institutional customers to digitally bill their customers via multiple communication channels, including email, SMS / text, voice / phone, web and mobile web. In addition, the platform enables the collection of related bill payments via ACH, credit and debit cards, and alternative payment methods (APM). The new capabilities will enable U.S. financial providers to provide a better bill-pay experience for their consumer customers in the case of RfP capabilities, while removing costly inefficiencies and meeting relevant current compliance regulations to comply with ACH direct debit rules with Citi Verify.

Present and Pay provides Citi Verify for account verification and RfP for real-time electronic bill distribution / real-time bill payment as an optional service with no additional required implementation. Both services are also available as standalone services other than Present and Pay.

Broadening Citi's strategy to leverage fintech partnerships, Citi provides Present and Pay through fully integrated partnership with superior billing service providers (BSPs), such as Aliaswire Inc., the first BSP to launch Request for Pay and Citi Verify for Citi's institutional investors. Scott Goldthwaite, President, Aliaswire, a Massachusetts-based payment technology company that equips banks to provide custom-branded billing and payment capabilities to their commercial clients, stated that Citi’s new capabilities are the future of payment processing.

Citi further emphasized that Citi Present and Pay includes Citi Verify to enable customers to effortlessly perform real-time validation of customer bank account details and ensure compliance with the new Web Debit Account Validation Rules from the National Automated Clearing House Association (Nacha), which require institutional billers and other ACH payment originators to confirm the validity of a payer's bank account before using ACH direct debit to collect the payment.

This improved capability allows customers to validate their US-based customer's bank account information before registering the customer with Present and Pay and / or initiating a payment transaction. The potential fraud and operational inefficiencies associated with using ACH direct debits to pay invoices are significantly reduced.

Additional capabilities with Citi Present and Pay are Request for Pay (RfP) messaging over TCH's RTP network. This feature allows institutional investors to use RfP messages to send electronic bills (e-bills) to clients with retail bank accounts in Citi and other banks participating in the RTP network. In addition to the benefits for billers, the RfP feature gives consumers the flexibility to pay invoices instantly, 365 days a year, at any time of day, with more control over their finances to avoid overdrafts and overdue fees.

Alberto Casas, North America Payments and Receivables Head, Citi Treasury and Trade Solutions, commented that more consumers are moving to digital services for management of their finances due to the continued speed of money movements, specifically as a result of COVID.

 The new billing capabilities provide the potential benefits noted below for institutional clients.

  • Operational Efficiency
    • Adding RfP-driven payments into a biller's broader payment strategy, enabling benefits such as easier reconciliation of billed amounts and payments collected
    • Potential reduction of operational exceptions often associated with ACH direct debits
    • With RfP, increased transparency and real-time visibility into when payments will be settled, reducing service calls that can also frustrate consumer customers
    • Access to Citi Verify real-time account validation helps reduce unintended payment declines, potential fraudulent transactions and other exceptions that require manual work to resolve
  • Access to Working Capital
    • Improved working capital and liquidity management by leveraging RfP for instant collection of funds on a 24/7 basis
  • Provides billers easy access to Citi Verify to comply with the new Nacha rules for ACH direct debits

Below are potential benefits for consumers paying bills from their retail bank accounts:

  • Defense mechanisms against unintentional usage of their accounts due to their biller's use of Citi Verify
  • Flexibility: Ability to pay bills instantly at any time of day, 365 days a year using RfP. Unlike ACH transactions or paper checks, payments associated with RfP messages are designed to be completed and processed in real time over the RTP network. Customers have more control over the timing of each payment made through the RfP, including the final decision on whether to approve and schedule each payment and when to approve it.

Citi's Treasury and Trade Solutions (TTS) enables clients’ success by providing multinational companies, financial institutions, and public sector organizations around the world with an integrated suite of innovative, bespoke cash management and trade finance services.

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