The iTreasurer newsheet this week examined how to minimise the impact of all the new regulations that the global transactions banks have to comply with, including Basel capital and liquidity rules, new tax initiatives like the Foreign Account Tax Compliance Act (FATCA), Report of Foreign Bank and Financial Accounts (FBAR) as well as FINRA’s onerous Know Your Customer (KYC), Know Your Customer’s Customer (KYCC) and anti-money laundering (AML) requirements. 

They recommend three steps to help mitigate the compliance nightmare. 

1 - Push back on legal/compliance departments

iTreasurer suggests that “Bank legal and compliance teams will too often push for the most conservative interpretation of regulatory requirements to mitigate the bank’s risk. This is why a bank may ask for a whole new set of supporting documents to open an account, even when a customer has delivered the same set of documents to open a similar account the month before.” And stop incentivizing “every bank to take the most conservative interpretation.” And, if necessary, “Corporates can also push back by saying they refuse to adhere to this interpretation and continue to move their business to banks that will not hold them to it.”

2 - Push back on the absence of definitive regulatory guidance

iTreasurer complain that “regulators offer almost no feedback on whether the actions the regulated entities propose or take will satisfy the rules. What’s worse, the regulators don’t always fully understand the activities being regulated and are learning as they go. Worse still, each major bank has large conference rooms full of their own dedicated team of regulators learning how the regulations apply to that bank and how that bank is attempting to comply with them.”

Instead iTreasurer recommend that corporates push back on this lack of guidance by speaking with regulators directly to explain why the current interpretation required of their bank makes the regulations untenable, or how compliance with it creates severe unintended consequences.” And also collectively complain through associations and other bodies, particularly to the US authorities because the US rules are the most onerous and, are setting the standard for most major banks worldwide.

3 - Employ technology to make compliance more effortless

iTreasurer believes that “it should be conceptually possible to comply effortlessly even with the most silly compliance mandate with the aid of technology. A big help here would be to force regulators to accept documentation digitally, so that repetitive requests could be satisfied with smart forms that are pre-populated with all the relevant information.” 

Unfortunately, the realities are still very different. Fortunately, third party services are starting to appear that remove some of the administration overhead of the new regulations.

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CTMfile take: iTreasurer are right: all corporate treasurers have a responsibility to ‘push back’ against the banks’ conservative interpretation of the regulations, and to complain directly to the authorities. Leaving all the protests to the treasury associations is clearly not enough. The other task for corporate treasurers is to specify what regulatory support services they require. Then third parties will build them.

And also be smart: remove need for double compliance - see.