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Payments 2012: Regulatory, Risk Management Knowledge Key for International Payments

Banks that help facilitate worldwide payments for their clients must be aware of the different rules and processes.

Banks, especially ones that do not have a large, international presence, must be fully aware of different regulations and currency-exchange processes when engaging in international payments, according to a panel session at the Payments 2012 industry conference hosted by NACHA - The Electronic Payments Association.

Stephen Wojciechowicz, product manager, at HSBC said institutions that get involved in the international payments arena have to be aware of the virtual alphabet soup of regulations, both domestic and global, including SEPA, FATF, FinCen, FATCA and Dodd-Frank. Dodd-Frank, he said, is relevant because many non U.S.-based banks "have been inquiring about the regulation, what they need to do and how it affects them."

Wojciechowicz also cautioned banks to be aware of all that is involved in making international payments, especially when currency exchange is involved. For example, he said if a receiving entity does not have an account with U.S. dollars, it can affect when the payment gets credited.

"It doesn't happen that same way," he said. "Foreign exchangers like that two day window."

For this reason, Wojciechowicz greatly stressed the importance of the proper protocol to follow if there ends up being a long delay or mistake in processing a payment.

"Know the amend-and-cancel process," he added. "Know who you have to call at that bank, It could be the difference between getting that money back right then or a month later."

Casey Wilcox, SVP, head of payables and international product at Capital One said the market for international payments is only going to grow. He noted that several of Capital's One's middle market and even small business clients are receiving international payments for goods.

Wilcox said it is imperative for banks to become knowledgable with all the regulatory and risk management issues pertaining to global payment transactions, or they risk losing customers.

"Many clients don't realize, nor should they, the steps that each payment goes through," he said. "If you don't know all the risk implications it ultimately filters back down to your clients," who might look to another bank's services.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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