Correspondent Account KYC Toolkit : A Guide to Common Documentation Requirements

The International Finance Corporation (IFC), the private sector arm of the World Bank Group, launched the Global Trade Finance Program (GTFP) in 2005. Under this program, IFC guarantees the payment risk of counter-party banks in emerging markets re...

Full description

Bibliographic Details
Main Author: International Finance Corporation
Language:English
en_US
Published: Washington, DC 2015
Subjects:
PDF
Online Access:http://documents.worldbank.org/curated/en/2009/10/23974312/correspondent-account-kyc-toolkit-guide-common-documentation-requirements
http://hdl.handle.net/10986/21560
Description
Summary:The International Finance Corporation (IFC), the private sector arm of the World Bank Group, launched the Global Trade Finance Program (GTFP) in 2005. Under this program, IFC guarantees the payment risk of counter-party banks in emerging markets related to a variety of underlying trade instruments. The GTFP also provides technical assistance to banks, with a focus on institutional capacity building in the broad areas of Trade Finance and International Trade Operations. Trade is a fundamental component in a country s growth and development and this has been especially true for emerging markets. The IFC with its mandate to support the private sector within developing countries actively works to facilitate cross-border trade through its trade finance program. Under the GTFP, IFC can provide guarantees covering up to 100 percent of a transaction value thus facilitating the parties involved with the trade transaction to close the deal despite challenges they may have encountered with credit limits, country exposure constraints, etc. The underlying framework between these financial institutions is normally a correspondent banking relationship1, or, at a minimum, the completion of a Know Your Customer ( KYC ) compliance file which needs to be in place for the documentary credit or other trade instrument to be issued, confirmed or negotiated. From its work in developing economies, IFC has found that many banks encounter difficulties in establishing correspondent banking relationships. Some of the difficulties involve inadequate or poor information being provided by the Applicant Bank to support the application to the potential correspondent. The guidelines presented herein, which draw upon the results of research undertaken with local, regional and international banks participating in the GTFP, are designed to inform banks of international best practice standards with regard to the information needed to support an application for a correspondent banking relationship or to respond to a request from a bank related to its internal KYC compliance procedures. By improving the content and delivery of such information, an Applicant Bank presents itself in a professional manner and may reduce the time taken for the application to be processed.