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2018

BAFT Annual Review MULTI LATERAL TRADE AGENCIES

MEMBERS

TRADE ASSOCIATIONS

POLICY MAKERS

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tter from the Chair and CEO

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Letter from the Chair and CEO

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Global Policy Advocacy

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Joint Industry Initiatives

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Industry Standards & Best Practices

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BAFT Councils, Committees and Working Groups

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Future Leaders Program

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Regional Highlights

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Training and Education

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Conferences and Events

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Expanding BAFTs Global Footprint

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Get the Most of Your Membership

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BAFT Members

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BAFT Board of Directors

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BAFT Staff

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Letter from the Chair and CEO Members we talked to agreed that the transaction banking industry is undergoing the most significant and most exciting change many of us have seen in our lengthy careers. The combination of demographic and economic shifts, geopolitical turbulence, technological innovation, payments and trade disruption, new market entrants, and an emerging generation of human capital have created massive changes and excitement in the industry. BAFT has been centrally involved in this evolution and is expanding to meet the needs of our members. Policy engagement has continued to grow, and BAFT is actively engaged in policy roundtables and bilateral meetings with dozens of global and local policy makers in more jurisdictions than ever before. Over the past 5 years, membership has grown by 59% and expanded to 57 countries, and attendance at BAFT programs and events has grown by 54%. With more members in more geographies, engaging in more policy and business dialogue, BAFT has strengthened its advocacy for the transaction banking industry. The success of our financial crime compliance advocacy has led to clarification of regulatory guidance, encouraged greater public-private sector cooperation to combat financial crime, and raised awareness amongst practitioners and regulators through education. The addition of many new FinTech providers has increased the thought leadership capacity and broadened the policy perspective we have

brought to the innovation agenda. Partnerships with other industry bodies have allowed BAFT to better serve our members by focusing our limited resources on the areas of most importance without redundancy of effort with other trade associations in which you also participate. We have advanced work on industry best practices and standards such as a revision to the MRPA that will help achieve true sale, started development of the Respondent’s Playbook to help reduce the uncertainties of de-risking, began drafting an Islamic Trade MRPA, a payment fraud indemnity, KYC/CDD principles for open account trade, and several papers under way on digital transformation topics. The BAFT Future Leaders have established a vision of the next generation of leadership in our industry, and we are proud to have been a part of their development. They created a video this year to help all of us tell the story of our industry to help recruit the next wave of human capital. Change can be frightening, especially at the pace we are seeing it happen, but together, our community will embrace this transformation. Thank you all for your continued support of BAFT.

Kimberly Burdette

Tod Burwell

Chair, BAFT

President and Chief Executive Officer BAFT

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Global Policy Advocacy With an increasing membership, our voice as a global advocate has become stronger, and our circles of engagement have become broader. Over the course of 2018, BAFT staff participated in meetings with dozens of policy makers and multilateral bodies to advance industry priorities on trade policy, prudential policies affecting trade, Fintech regulatory frameworks, AML/KYC, trade-based money laundering and faster payments, among others. Below is a sample of the global policy stakeholders with whom BAFT met over the past year to advance industry priorities on trade, payments, prudential policy, Fintech frameworks, financial crime and other matters:

Canada Embassy of Canada in the United States

United States Bureau of Consumer Financial Protection FDIC Federal Reserve Board FinCEN OCC Department of Commerce Department of Treasury ExIm Bank U.S. House of Representatives SBA USTR Mexico Banco de Mexico Embassy of Mexico in the U.S. Ministry of Economy National Banking and Securities Commission

Belize Central Bank Embassy of Belize in the U.S. Ministry of Finance Curacao Ministry of Finance

France FATF United Kingdom Bank of England European Banking Authority Financial Conduct Authority

BAFT recognizes the value of industry collaboration and has partnered with numerous trade associations, coauthoring advocacy letters and participating in meetings with local regulators and policy makers. As a global advocate engaging locally, BAFT will continue to expand its reach to drive forward the matters of importance to the transaction banking community.

Belgium European Commission European Parliament World Customs Organization

Germany Deutsche Bundesbank Lebanon Banque du Liban

Azerbaijan Financial Market Supervisory Authority

Hong Kong HKMA

Netherlands Ministry of Finance

Jordan Central Bank

India Reserve Bank of India

Switzerland BCBS FSB WTO

Qatar Embassy of Qatar

Sudan Central Bank

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Singapore APEC Secretariat MAS Singapore Police Force


Trade Policy

BAFT contributed broadly to the dialogue on trade policy through a variety of channels including:

Global trade volume grew 4.7% in 2017, the strongest since 2011, and is on pace for roughly 4.4% in 2018. Continued expansion will depend on robust global economic growth and will be increasingly influenced by trade policy decisions made in capitals around the world. This year has brought a heightened degree of uncertainty with trade tensions between major economies leading to increased protectionism.

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While the eleven remaining members of the TransPacific Partnership (TPP) made headway to ratify the Comprehensive and Progressive Trans-Pacific Partnership, the renegotiation of the North American Free Trade Agreement (NAFTA) is in progress, the UK continues the process of negotiating its exit from the European Union, and the escalating trade dispute between the United States and China now includes the Europe Union, Canada and Mexico who have retaliated against U.S. tariffs. Taken together, these and other geopolitical events have raised concerns of potential detractors to the proven positive economic value of global trade. While corporate bank clients have the most at stake in these tariff disputes, the negative impact on corporations will also have a potentially negative impact on bank business.

International Chamber of Commerce (ICC) B20 Task Force The ICC is an integral part of annual B20 meetings including co-chairing several committees within the B20. As both an ICC member and as an influential partner industry body, BAFT participates in a consultation process to put forth recommendations for consideration by both the B20 and G20 Heads of State. This year, the focus included: 1.

Ensuring national regulatory requirements focused on combatting financial crime are aligned with Financial Action Task Force (FATF) and Financial Stability Board (FSB) guidance.

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Pooling AML/KYC/CFT compliance information to create early warning systems, to inform policy making, and create opportunity for more effective mitigation of financial crime.

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Legislating a requirement for importing/exporting companies to acquire a Legal Entity Identifier (LEI)

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Implementing UNCITRAL (United Nations Commission on International Trade Law) draft legislation for e-title documents.

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Mandating FSB to take a closer look at riskaligned capital treatment for trade finance.

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Asia Pacific Financial Forum (APFF) Under the oversight of the Asia Business Advisory Council (ABAC), the APFF provided input to APEC Finance and Trade Ministers on the impact of digitization in trade and the role of data in advancing cross-border commerce, improving the fight against financial crime, and increasing wealth through trade. In addition to the papers submitted, BAFT participated in Trade & Supply Chain workshops to provide thought leadership and critical input.

U.S. Department of Commerce Trade Finance Advisory Council (TFAC) BAFT served as the Vice-Chair of this public-private sector industry forum organized under the Department of Commerce. The council provided recommendations to the U.S. government on suggested strategies to increase access to finance for small and medium sized enterprises. Engage China Coalition As part of this coalition of eleven U.S. financial services industry bodies, BAFT provided input to President Trump, Secretary of Commerce, U.S. Trade Representative and others on the value of U.S. China trade relations, and concerns of the financial services community and their clients. World Trade Organization (WTO) Trade Experts Roundtable Leveraging the BAFT expertise with financial crime and correspondent banking de-risking, we participated in the WTO-hosted roundtable along with the FSB, to discuss general trade trends, and specific opportunities for the global community to address the trade finance gap being negatively impacted by financial crime compliance and de-risking. Direct Bilateral Engagement Through meetings with policy makers around the world, BAFT engaged in discussions of trends, opportunities, challenges and policy implications, providing recommendations for advancing important topics.

As free trade continues to be vulnerable to shifting policies, BAFT remains committed to promoting the enduring value of free trade as a means to spur economic growth and employment globally.

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U.S. Export-Import Bank (EXIM) BAFT has remained active in advocating for the U.S. ExportImport Bank to return to fully functioning status. While EXIM was reauthorized through 2019, it has been without a Board quorum to authorize transactions over $10 million for the last two years. During this time, BAFT has worked closely with a coalition of other industry associations in calling for the U.S. Senate to confirm Board nominees with a track record of support for the Bank. BAFT met with the current nominee to be President of EXIM and issued Statements for the Record for EXIM Board confirmation hearings. BAFT will continue to work with members and industry stakeholders as board nominees advance through the confirmation process in the Senate. BAFT also organized a private roundtable with members, the Chief Operating Officer and other senior EXIM leaders to provide suggestions for improving Bank processes. The engagement demonstrated a willingness to consider the input of industry stakeholders, and a commitment from EXIM staff to return the Bank to full operating strength. We are gearing up for the confirmation process for the nominee and anticipating continuing advocacy for reauthorization beyond 2019.

Prudential Framework Basel Over the past several years, BAFT conveyed industry concerns that proposed changes would have a detrimental impact on the ability of banks to support cross-border commerce and economic growth. In December 2017, the Basel Committee finally endorsed the outstanding Basel III post-crisis regulatory reforms. Upon the announcement of the final framework, BAFT undertook an initial assessment of the final Basel III framework on trade finance and member education is ongoing to inform members of the components of the framework and implementation timetables. Through a multilateral approach, BAFT will continue to work with members, the global regulatory community, policy makers, and industry stakeholders to address any unintended consequences of the final Basel III framework


that adversely impact trade and transaction banking. In preparation for the commencement of implementation in January 2022, BAFT will track local implementation efforts, as jurisdictions begin to draft proposals. BAFT will also engage with members to determine the cumulative impact of various banking regulations and the extent to which they are working at cross purposes. BAFT’s advocacy will continue to focus on conveying the low risk, low default nature of trade finance instruments, and advocating for uniform implementation.

Bank Recovery and Resolution - Article 55 In November 2016, the European Commission introduced a comprehensive package of legislative measures aimed at completing the EU regulatory framework for the banking sector. BAFT built on its previous advocacy to urge the European Commission and Parliament to provide a waiver of contingent trade finance liabilities from the scope of Article 55 of the Bank Recovery and Resolution Directive (BRRD), and as trialogue discussions get underway, several of the BAFT recommendations have been included in proposed amendments under consideration. From the introduction of the draft report, BAFT has closely monitored legislative developments and held direct dialogue with European decision makers. As the European authorities considered possible amendments, input from BAFT and the broader industry has helped provide a solution relating to contingent liabilities arising from trade finance. BAFT will remain active in tracking efforts to complete the banking package at the EU level, as well as with national jurisdictions, which will carry into 2019 for decision, and 2020 for implementation.

Prudential Regulation Authority (PRA) Consultation

Credit Risk Mitigation (CRM) can be funded or unfunded and can be achieved through a guarantee with the obligation of a third party to pay out in the event of non-payment or default of the credit obligor. For eligibility as a guarantee for CRM, strict eligibility criteria must be met. The PRA issued the consultation identifying that additional clarity is required to ensure that capital relief may be obtained where the risk is effectively transferred to the guarantor via these guarantees. BAFT submitted a joint comment letter with the ICC, ITFA and the IIF on how the proposal in the consultation could affect the industry’s use of guarantees related to unfunded risk participations in funded assets under the BAFT MRPA, trade credit insurance, and export credit agency guarantees and resultant unintended consequences impeding the use of the financial tool and thus inhibiting global economic growth. We await feedback from the PRA on the comment letter and will determine next steps.

Financial Crime Correspondent Banking De-risking In its March 2018 report, the Financial Stability Board (FSB) announced that the number of worldwide correspondent banking relationships continues to decline, creating longer and more cumbersome payment chains, and concentrating the correspondent banking business in a small number of remaining participants. They noted this could affect competition, raise costs and especially lead to more fragile networks since failure of a participant could have larger effects on the market and the economy. BAFT has raised awareness of this issue over the past four years, and has continued to engage both the public and private sectors on the topic by: •

In February 2018 the Bank of England Prudential Regulation Authority issued Consultation Paper CP6/18 entitled Credit risk mitigation: Eligibility of guarantees as unfunded credit protection - on proposed changes to Supervisory Statement (SS) 17/13 ‘Credit Risk Mitigation’ to clarify expectations regarding the eligibility of guarantees as unfunded credit protection.

Participating in a roundtable hosted by the Basel Committee on Banking Supervision, Committee on Payments & Market Infrastructure and Financial Stability Board to discuss the role of utilities, legal entity identifiers, data pooling and other measures to aid in the process of managing the KYC and transaction monitoring functions when combatting financial crime.

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Hosting a meeting with the regulatory agencies that comprise the U.S. Federal Financial Institutions Examination Council (FFIEC), FinCEN, and U.S. Treasury to discuss a variety of correspondent banking issues contributing to de-risking.

Participating in meetings with members of the U.S. Congress and officials from countries impacted by derisking to discuss impacts and potential solutions.

Participating in invitation-only conferences such as the US-MENA Private Sector Dialogue (PSD) sponsored by the Union of Arab Banks and the Federal Reserve Bank of New York and roundtables organized in connection with the fall and spring World Bank / IMF meetings.

Providing practical information on correspondent banking and de-risking to public-sector entities preparing studies, such as the report on de-risking along the U.S. southwest border by the U.S. Government Accountability Office (GAO) issued in February 2018.

Much of the efforts of BAFT and industry bodies have been focused on public sector engagement, development of best practices to provide greater clarity on regulatory expectations, and/or development of technological enhancements to improve banks’ ability to respond to financial crime threats. To help provide greater clarity on the expectations correspondent banks have for their respondent banks, BAFT is currently working on the Respondent’s Playbook, which is expected to be available in the fall of 2018.

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Reform of the AML Framework In early January, BAFT signed a joint industry letter supporting a draft bill introduced in the U.S. House of Representatives entitled Counter Terrorism and Illicit Finance Act that would reform portions of the U.S AML regulatory regime. Among other things, provisions of the bill increase reporting thresholds, allow the sharing of information with foreign branches and affiliates, and require closely-held corporations and limited liability companies to submit beneficial ownership information to FinCEN. In August 2017, BAFT signed a joint industry letter supporting a similar bill entitled the Corporate Transparency Act of 2017.

FFIEC, BSA/AML Examination Manual The U.S. Federal Financial Institutions Examination Council (FFIEC) Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) Examination Manual provides guidance to examiners for carrying out BSA/AML and Office of Foreign Assets Control (OFAC) examinations. The federal banking agencies in the United States are in the process of working together on various topics related to the Bank Secrecy Act, including revisions to the Examination Manual. The BAFT AML KYC Working Group conducted a full review and recommended changes to the Trade Activities Section of the Manual. We are awaiting feedback from the agencies on our comments. Separately, BAFT hosted the Federal Reserve Board, FDIC, OCC, FinCEN, and U.S. Treasury to discuss a broad set of issues beyond the manual including: •

Differences between U.S. laws, regulations, and guidance, and FATF/BCBS standards and guidance.


Greater standardization of the CDD/EDD process used for respondents.

Potential reform or restructuring the U.S. AML regime.

Roles, regulations, and supervision of non-bank financial services and technology providers.

FinCEN Customer Due Diligence (CDD) Rule Compliance with FinCEN’s final customer due diligence (CDD) rule became mandatory on May 11, 2018. BAFT provided members resources and reference materials to facilitate their implementation of policies, procedures, and controls to comply with the regulation, and continues to collect questions from members on the final rule and FAQs guidance for future dialogue with FinCEN.

Sanctions Issues Over the past year, there have been multiple changes and additions to the sanctions regulations issued by the U.S. Treasury Department’s Office of Foreign Asset Control (“OFAC”). In collaboration with other industry associations, BAFT has been meeting regularly to discuss potential unintended consequences of the imposition of new regulations and changes to current ones. We expressed industry concerns over potential misinterpretations of OFAC’s advisory regarding deceptive shipping practices being used to evade North Korea sanctions. BAFT and The Clearing House (TCH) obtained clarification from OFAC that the advisory was written as an alert for the trade finance community where certain practices may create significant sanctions risk for financial institutions, buyers and sellers, and parties in the shipping industry including insurers, flag registries, and shipping companies. More recently BAFT worked with TCH, SIFMA, ABA, UK Finance and our membership to address the potential conflicts of law issues that may arise from the snap back of OFAC’s Iran sanctions and the European Union’s formal process to update the 1996 EU Blocking Regulation (the “Blocking Statute”) to include certain US sanctions on Iran. We continue to collaborate closely with our US and EU partners to address the issues.

Payments Remittance Transfers Together with several other trade associations, BAFT submitted a comment letter on the remittance rule to the Bureau of Consumer Financial Protection (the Bureau) in response to the Bureau’s notice and request for information (“RFI”) regarding its review of its rules. In the letter, the associations urged the CFPB to exclude transfers that are outside the commonly understood scope of remittances; preserve depository institutions’ ability to estimate fees and exchange rates after the July 21, 2020 “sunset date” of the temporary exception, provide more flexibility and reduce redundancies with respect to disclosures; and modify the error resolution provisions. The Bureau recently informed the associations that it is seriously considering our requests. BAFT will notify members about any action the Bureau takes regarding the rule, whether prompted by the industry letter or the Bureau’s independent assessment of the rule due October 2018.

U.S. Faster Payments The U.S. Federal Reserve System dissolved the Faster Payments Task Force in the summer of 2017 following publication of the final report, The U.S. Path to Faster Payments. One recommendation of the final report was to form an Interim Collaborative Working Group (ICWG) to: •

develop an initial faster payments governance framework incorporating public commentary

establish the framework and membership

The ICWG, after changing its name to the Governance Framework Formation Team (GFFT) to better align with its mission, published its operating vision for the U.S. Faster Payments Council and requested stakeholder feedback through an online survey. BAFT’s response suggested various revisions to the proposed structure and decisionmaking processes of the council. BAFT will continue to follow and to keep members informed regarding the development of the U.S. Faster Payments Council.

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Innovation The BAFT Innovation Council was formed more than two years ago to educate the community on the benefits of emerging technology, to track use cases beneficial for the transaction banking industry, and to engage policy makers to ensure innovation is encouraged, while maintaining the clarity of responsibilities of all actors in the new financial ecosystem. BAFT has educated policy makers in various jurisdictions on the use cases for distributed ledger technology (DLT) in transaction banking. BAFT discussed the various actual and potential uses of DLT in trade finance to government personnel at an event hosted by the International Trade Administration of the U.S. Department of Commerce, and also presented remarks to senior U.S. Congressional staffers at a policy program hosted by the Congressional Research Service. We highlighted characteristics of DLT beneficial to the financial services industry and use cases in post-trade securities settlement, payments, and international trade. Additionally, BAFT discussed the need for policy support for innovation and identified legal questions with respect to DLT that remain open issues. BAFT continues to communicate to policymakers the need to rationalize the laws and regulations applicable to both bank and non-bank providers of financial services leveraging the new technology and business models. We have encouraged government agencies globally to accept the use of regulatory technology (RegTech) by financial institutions for regulatory compliance and to adopt emerging technologies for the fulfillment of their regulatory oversight responsibilities.

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BAFT filed a response to the consultative document entitled Sound Practices: Implications of Fintech Developments for Banks and Bank Supervisors issued by the Basel Committee for Banking Supervision (BCBS). The document assessed how technologydriven innovation in financial services may affect the banking industry and the activities of supervisors in the near to medium term. BAFT communicated its broad support for the recommendations set forth by the BCBS and offered supplementary information for consideration by the BCBS and other authorities active in the development of a rational framework for innovation in financial services, which convinced the BCBS to modify several of the observations and conclusions that appeared in its final report.

U.S. Treasury Department personnel (TFFC and FinCEN) solicited BAFT’s thoughts on FinTech and RegTech, including bank approach, associated opportunities and challenges, and management of vendor relationships. BAFT organized a meeting with its members to identify areas requiring the issuance of a new, or change of an existing, AML law or regulation to address innovation.

In discussions with regulators in Mexico, BAFT discussed the importance of a level playing field upon the release of the newly established FinTech law.


Joint Industry Initiatives Trade Finance Advisory Council (TFAC) In August 2016, the U.S. Department of Commerce formed the Trade Finance Advisory Council (TFAC) to advise the Secretary of Commerce on identifying effective ways to expand access to financing for U.S. exporters, especially small- and medium-sized enterprises (SMEs). BAFT was selected to participate, and was subsequently elected as the council’s Vice Chair. The charter is under consideration for renewal, but during its first two years, the TFAC has approved a number of key recommendations subsequently submitted to the Secretary of Commerce for consideration. Some of the recommendations put forth for private sector lending to stimulate exports included: tax repatriation initiatives, data standardization for facilitation of export credit, trade finance education strategies for the new to export, broader use of private sector trade credit insurance, expansion of the capacity of the Office of International Trade at the U.S. Small Business Administration, integration of trade finance related questions into the Federal Reserve’s annual small business credit survey, expansion of public sector insurance and guarantee capacity through private sector reinsurance and effective utilization of the U.S. Export Import Bank as a competitive tool to further drive US exports and job creation.

Asia Pacific Financial Forum Under the oversight of the Asia Business Advisory Council within APEC, the Asia Pacific Financial Forum (APFF) has put forth policy recommendations including advancing economic growth through supporting growth of international trade and supply chain. BAFT continued its participation in this channel to advocate for enhancements to the legal and regulatory approach to data, to support the trend of digitization of trade and commerce. APFF hosted several workshops, in which BAFT participated and spoke on the role of data in trade digitization, the inherent conflicts of open banking trends and data privacy, the private sector needs from the public sector to facilitate cross-border digital trade, and some specific policy issues of consideration for APEC Finance and Trade Ministers to consider.

Wolfsberg Group BAFT and the Wolfsberg Group partnered on several important initiatives this year. Feedback from BAFT staff and members provided valuable input to the Wolfsberg Group’s revision of the Correspondent Banking Due Diligence Questionnaire (CBDDQ) and related guidance. BAFT and ICC issued official statements of support of Wolfsberg in its production of a Trade-Based Money Laundering (TBML) educational video, which was thematically consistent with the BAFT TBML white paper published in 2017. A representative of the Wolfsberg Secretariat participated in BAFT’s development of the Respondents’ Playbook and a BAFT staff member attended the annual Wolfsberg Forum of financial crime compliance experts. At the Wolfsberg Forum, BAFT and a member bank co-led a discussion on the effective design and use of a KYC utility based on fairly standardized information provided in response to the CBDDQ. BAFT looks forward to working with Wolfsberg again in its production of educational webinars on international standards underlying each section of the CBDDQ.

ICC - Task Forces

TFAC Vice-Chair and BAFT SVP for Trade, Stacey Facter, in a meeting with other TFAC members.

BAFT staff currently participate in several industry groups and certain ICC Banking Commission Industry Task Forces. In addition to participating in the joint effort to draft and publish the Wolfsberg/ICC/BAFT Trade Finance Principles in 2017, a similar compliance best practice guide is being developed for Open Account Trade. BAFT is on the ICC

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Trade Digitization Steering Committee and an active contributor on the ICC Financial Crime Compliance task force. As outlined earlier, BAFT contributes regularly to the B20 Task Force, and is an active participant in the efforts to look at pooling of compliance data. Joining together on certain important industry challenges and issues provides strong unified support for identifying important recommendations for addressing them and further encouraging global economic growth. We will continue to look for opportunities to partner in advocacy, similar to our cooperation in the PRA consultation described earlier.

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Industry Standards & Best Practices Beyond advocating for regulatory and legislative policy, a core part of the BAFT mission is to provide the industry with clarity on best practices that can be used in daily commerce. Building on past efforts, the below initiatives were the result of strong collaboration between BAFT, its members, and partner industry organizations for the betterment of the transaction banking industry.

several governments including Indonesia, Malaysia, Brunei, Sudan, Pakistan, Dubai, Kazakhstan and international financial institutions active in Islamic trade. IIFM has worked with other industry bodies to publish Sharia-compliant standards for foreign exchange, swaps, and a variety of financial instruments. BAFT and IIFM anticipate the IMRPA to be publicly available in late 2018 or early 2019.

BAFT Master Risk Participation Agreement (MRPA) The BAFT Master Risk Participation Agreement (MRPA) has become an industry standard document used to facilitate secondary sales of trade assets. In response to changing market needs, we have updated the template, beginning with the English law version. A joint working group of practitioners and legal experts from members of BAFT and the International Trade & Forfaiting Association (ITFA) focused on identifying necessary changes, additions and deletions to more closely align these forms with current secondary market distribution practices. BAFT and ITFA launched the revised English Law form to the industry in September at ITFA’s Annual Meeting and BAFT’s 28th Annual Conference on International Trade, and will look to complete the NY Law form in early 2019.

Islamic Trade Master Risk Participation Agreement (IMRPA) In March 2018, BAFT and International Islamic Financial Market (IIFM) announced plans to jointly develop a version of a MRPA that would support the sales of funded and unfunded trade assets, consistent with Islamic Trade practices. A working group of conventional banks, Islamic banks, government agencies, legal and Sharia scholars are in the process of completing drafts of templates as well as a guidance paper. There are currently separate documents for funded and unfunded instruments. As of the time of this report, the group has just completed the 3rd draft and is now doing a full Sharia-compliance assessment. IIFM was established in 2002 as a neutral development institution hosted by the Central Bank of Bahrain. The organization includes representation and support from

BAFT President and CEO Tod Burwell and IIFM CEO Ijlal Ahmed Alvi sign a MOU to jointly create a MRPA to support Islamic trade finance last March 2018 in Dubai.

Code Is Not Law: The Legal Background for Trade Finance Using Blockchain The BAFT Innovation Council formed a Distributed Ledger Payment Commitment (DLPC) Working Group to produce business best practices and technical standards for payment commitments on DLT-based trade finance platforms. During its activities, the working group identified a key barrier to the execution of trade finance transactions on DLT platforms: U.S. law does not recognize electronic negotiable instruments. BAFT, R3, and Sherman & Sterling produced a paper setting forth the problems and potential solutions to the legal issues. The paper concludes that although the amendment of Article 3 of the Uniform Commercial Code is the ideal long term solution, the creation of a participant rulebook to fill the existing gaps in law is the most expeditious solution. The paper entitled Code Is Not Law: The Legal Background for Trade Finance Using Blockchain was publically released in September 2018.

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Market Practices in Supply Chain Finance – SCF Forum - Receivables Discounting The BAFT Receivables Purchase Working Group made up of members from the BAFT Supply Chain Finance Committee has completed its review of the “Receivables Discounting” technique as defined in the Global Supply Chain Finance Forum (GSCFF) industry glossary with the goal of developing sound industry practices for the various supply chain techniques. The GSCFF is conducting final review at the time of this publication and expect to make public the Market Practice for Receivables Discounting in late 2018. The groups will then look to develop guidance for the remaining techniques including Payables Finance as the next likely area of focus.

Trade Finance Principles for Open Account Trade The Wolfsberg Group, ICC and BAFT Trade Finance Principles published in early 2017 edition covered know your customer (KYC) and customer due diligence (CDD) guidance on requirements at the transaction level for the various parties in a traditional trade transaction (commercial LCs, documentary collections, standby LCs and guarantees). This publication has been instrumental in achieving greater clarity in best practice and discussions with regulators regarding expectations. Currently, the joint association drafting group is focused on identifying such requirements for open account trade transactions such as payables finance, receivables discounting, and bank to bank trade loans. The next edition of this publication is expected to be made available by early 2019 and will also prove to be an excellent industry tool to assist trade finance practitioners in identifying the KYC – CDD requirements for each of the parties to an open account trade transaction. The collaborative effort by the leading industry organizations has helped to standardize the practice of financial crimes compliance globally and provide credible evidence to regulators of what industry practice and examination benchmarks should consist of. BAFT will continue to work with the ICC and Wolfsberg Group to educate the industry and regulators to gain greater effectiveness and consistency in financial crime compliance.

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Respondents’ Playbook In an effort to ameliorate and potentially reverse derisking in correspondent banking, BAFT is preparing a “Respondents’ Playbook.” The playbook documents the expectations of correspondent banks and best practices of respondent banks that, if properly implemented, should make respondent banks seeking to obtain new relationships or retain existing relationships more attractive to their correspondent banks. The playbook also contains recommendations for respondent banks that are small and/ or operate in high-risk jurisdictions and outlines special considerations for money services businesses and FinTech payment providers. A working group of correspondent banks is producing the playbook with input from a group of respondent banks and a project team from the 2018 Future Leaders Group. The publication release is anticipated in the fall of 2018, and will be followed by education programs in 2019 to address the content in more interactive fashion.

Fraud Indemnity Two parallel working groups – one predominantly consisting of North American and one consisting of European practitioners, have collaborated to prepare a template fraud indemnity agreement that BAFT members could chose to use requesting or receiving a request for the return of funds fraudulently transferred cross-border. The working groups have considered regional legal and regulatory implications, and have drafted both comprehensive and limited versions of the agreement. After gathering input from MENA and Asia-based members, we anticipate publication of the final versions of the templates in late 2018.

HELPFUL HINT: The Library of Documents houses the Master Participation Agreement, Best Practices and Industry Standards, white papers and comment letters. Access them quickly at www.baft.org/library


RFP Templates (Regional Banks) In 2017, the BAFT Regional Bank Council created a Trade Products RFP template for the purpose of assisting smaller/ regional banks in the process of soliciting software solutions. The goal was to research and build a set of questions that would not only allow for standardization between the banks, but would foster more efficient response process from vendors. Solution provider members of BAFT participated in the review process to ensure questions would be clear and fair. In 2018, the Regional Bank Council completed the second phase of the project, a template for foreign exchange platforms. Each RFP comes with a customizable cover letter, submission guidelines, and questionnaire. The templates are available for use by all BAFT members.


The guide serves as playbook for executing documentary collections and is a great source of information for individuals new to the industry as well as advance practitioners wanting to benchmark their practices to industry standard. The refresh was released in summer 2018

The Payments Information Working Group of the Payments Committee is updating a chart BAFT published in 2016 that outlines the local implementation of FATF Recommendation 16 for sending payments as well as additional regulatory requirements for receiving payments.

The Distributed Ledger Payment Commitment (DLPC) Working Group of the Innovation Council continues to develop business best practices (including a participants’ rulebook) and technical standards for the creation and transfer of payment commitments on DLTbased trade finance platforms.

The MRPA Smart Contract Working Group of the Innovation Council was formed to identify the pain points associated with the current paper-based Master Risk Participation Agreement (MRPA) and to explore how a DLT smart contract that automates the MRPA and other related processes might resolve or ameliorate the pain points. The working group is expected to produce a report of its findings by year end.

Upcoming Guidance Papers in Progress Several BAFT committees and working groups have guidance papers in various stages of development. •

The Auto Extension Working Group continues work to address the multiple challenges facing financial institutions with respect to auto-extension clauses in certain standby letters of credit, and how to best handle them.

The Collections Reference Manual Working Group is applying a refresh to the 2006 collections manual.

BAFT Councils, Committees & Working Groups Leadership Councils

Committees

Working Groups

Asia Council Europe Council MENA Council North America Council • Regional Bank Council • International Advisory Council (IAC) Future Leaders Council Global Trade Industry Council (GTIC) Innovation Council Transaction Banking Global Leaders (TBGL)

Commercial Letters of Credit • Central LC Subcommittee • Southeast LC Subcommittee • West Coast LC Subcommittee Standby LC/Guarantees Trade Compliance Legal Advisory Regulatory Affairs Asia Trade Finance Trade Finance Structured Trade/Export Finance Supply Chain Finance Payments Membership Solution Providers

AML/KYC Best Practices Auto Extension Best Practices Data Privacy Review Distributed Ledger Payment Commitment (DLPC) Fraud Indemnity Government Pronouncements on DLT MRPA Smart Contract MRPA Update Respondent’s Playbook Required Payments Information (by Jurisdiction) SCF – Receivables Purchased

For a full list and description of Councils, Committees and Working Groups, go to www.baft.org/committee

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Future Leaders Program In it’s third year, the BAFT Future Leaders Program has become a meaningful development opportunity for rising leaders in the industry. The Class of 2018 featured 31 individuals from 16 countries and a variety of disciplines within transaction banking. This year’s groups participated in the development of the Respondent’s Playbook, produced reports on cybersecurity threats and defense, artificial intelligence, and transaction banking recruitment (includes a video that can be licensed by banks to use for their own recruiting purposes). As in past years, the program kicked off at BAFT’s Global Annual Meeting - Europe in London and the graduation was held during the BAFT North America Meeting in Orlando, FL.

Stephanie Wolf, Bank of America Merill Lynch (Program Sponsor) BAFT’s Future Leaders program continues to reflect the diverse talent we are fortunate to have in our industry, and I was truly honored to be a part of this vital industry initiative.”

Working with my team was a fantastic experience - I did not expect to build such good friendships with people that I only met a few times in person.

The diversity of participants of the Future Leaders group, and the engagement from our mentor exceeded my expectations.

Program mission Support the development of future transaction banking leaders

Program objectives: 1.

Recognize rising talent in the transaction banking industry and support leadership growth

2.

Form guidance on industry issues from the perspective of future industry leaders

3.

Build a network of young leaders that will lead the next generation in transaction banking

4.

Provide future leaders exposure to current transaction banking industry leaders

5.

Create a pipeline of talent that will contribute to industry issues through BAFT

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2018 BAFT ANNUAL REVIEW

View the Transaction Banking Recruitment Video, produced by the Future Leaders Class of 2018 at www.baft.org/TBVideo Interested in the video? Contact info@baft.org.


2018 Future Leaders along with Tod Burwell, BAFT and their sponsors Suresh Subramanian (BNP Paribas), Michael Hogan (MUFG), and Stephanie Wolf (BAML)

Future Leaders Council

Class of 2018 Future Leaders Graduates

One of BAFT’s primariy priorities going into 2018 was to create opportunities for Future Leaders alumni to stay actively engaged in BAFT whilst helping to further develop and enhance the program. The inaugural Future Leaders Council launched in spring 2018 is co-chaired by Natalia Nobre (Scotiabank, FL-2017) and Caryn Pace (JPMorgan Chase, FL-2016). All alumni are invited to join the Council meetings and events. BAFT achieved one of its goals in launching the program by electing its first Future Leaders alum to the BAFT Board of Directors (Miriam Ratkovicova, Deloitte, FL-2016).

Adam Hanke - Natwest/RBS Adriaan Bellaart - ING Bank NV Allison Vara - JPMorgan Andrew Smart - Scotiabank Aoun Al Aoun - Arab Bank Plc Agharza Bakhshiyev - Kapital Bank Beatrice E. Lee - HSBC Bank Bret Berta - Fidelity National Information Services Inc. (FIS) Charlotte Kissmeyer - Skandinaviska Enskilda Banken AB (SEB) Cristina Thome Certucha - Société Generale Dario J. Sanchez - Fulton Financial Corporation Elie Medlege - Banque Libano-Française Hiren Shah - Pelican Janice Durisin - Deloitte Transactions and Business Analytics LLP Janna Webskowski - US Bank NA Joëlle Schmidt - Zürcher Kantonalbank (ZKB) Karen Sabioni Oliveira - BNP Paribas SA Karen Veslemøy Hveem - Danske Bank Kerim Yebari - Deutsche Bank AG Kit Lin - Barclays Kristin Francis - PNC Bank Marcus Jacobsson - Swedbank AB Melissa Gomes Ribeiro - Bank of America Merrill Lynch Mónica Couret - BBVA Nimesh Avantha - Standard Chartered Bank Ozgur Akdeniz - Australia and New Zealand Banking Group Pani Oritis - Santander UK Poppy Biswal - KeyBank National Association Renny Narvaez - BNY Mellon Steve Darnell - BMO Capital Markets William M. Santoro - IBM

Nominations for Class of 2019 Future Leaders open in August and close October 1, 2018. The program will formally launch in January 2019 during BAFT’s Europe Bank to Bank Forum in London. All BAFT Members are encouraged to apply.

HELPFUL HINT: For more on our Future Leader Program or to apply, visit www.baft.org/FutureLeaders

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Regional Highlights – The Americas Realizing the need for regional banks to assemble and discuss common challenges and best practices, BAFT offered its first conference geared solely for U.S. banks under $250B in assets – representing 47% of the North America membership. The event was attended by more than 35 institutions and focused on correspondent banking, supply-chain finance, foreign exchange and various SWIFT initiatives. Regional U.S. banks is one of the fastest growing membership constituencies within BAFT. BAFT continued to host important gatherings for Mexico and IAC members. For the second year, BAFT hosted a Roundtable in Mexico, including several meetings with regulators and the Mexican central bank, to provide critical advocacy outreach for members operating in the country. Roundtable topics included faster payments, derisking, and a new FinTech regulation. Similarly, the IAC met in New York for an eventful and thought-provoking panel on cyber security issues, blockchain technologies and the impact of the US administration policies on the international banking business. The Americas represent roughly 51% of BAFTs global community, and in 2018, again achieved double-digit growth, eclipsing 10%. The region consists of North, South, Central America and the Caribbean, and has a diverse group of global and regional banks, including a significant representation of U.S.-based foreign financial institutions (International Advisory Council). The North America Council (NAC), covering U.S., Canada and Mexico, is co-chaired by Amy Sahm, Fulton Financial Corporation and Jonathan Elkins, National Bank of Canada.

Supplier Partners 36%

Regional Banks 47%

Honorary 4% Government National Banks 4% 4% The Americas membership by category 2018

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2018 BAFT ANNUAL REVIEW

BAFT at Mexico roundtable in Mexico City

The North America Annual Conference drew 440 attendees, another conference record. Known as “mini-SIBOS” in the region, participants enjoyed the value of relationship building, business meetings, thought leading speakers and networking, and also celebrated the graduation of the Class of 2018 Future Leaders. The NAC looks forward to another stellar event in April 2019 in La Jolla, California.


After implementing several priorities in 2018, the NAC will raise the bar higher focusing on advocacy of trade policy, education, and the re-authorization of ExIm Bank. The councils will also look to support BAFT’s Respondents Playbook, the Supply Chain Finance Bootcamp, Financial Crime Compliance workshop, CertPay payments certification, and membership engagement, with a focus on membership expansion in Mexico, the Caribbean, and Latin America.

North America Co-chairs The NAC focuses on key topics and industry trends impacting our member community within our North American foot print. We take great effort to ensure the work we do is useful to the wider, global BAFT membership by providing meaningful insights into the many complex issues we face today. At the same time, we continuously strive to enhance and grow the North American BAFT membership and engagement.

Amy Sahm Fulton Financial Corporation

Jonathan Elkins National Bank of Canada

BAFT Appreciation Awards During the North America Annual Conference in Orlando, BAFT presented Appreciation Awards to four members who exemplified community leadership and through their volunteerism, were great ambassadors for the association over the past year. Our appreciation again goes out to:

Karin Walchshofer

Normand Girard

Maurice Iskandar

Ziad Ghosn

BMO Capital Markets

BMO Financial Group

Banque Libano-Française SAL

Bankmed (not present at the Annual Conference)

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Regional Highlights – Europe

BAFT membership in Europe spans 25 countries including new additions - Croatia, Czech Republic, and Ukraine, and accounts for 24% of the global BAFT community. The Europe Council (EC) oversees BAFT priorities and is crucial to BAFT’s advocacy engagement in the European Union and UK. The EC welcomed Patrick Gmür (Credit Suisse), as the newly elected co-chair to serve along with Raffaele Martino (Intesa Sanpaolo S.p.A.) who is serving the final year of his term.

TBML: The TBML Working Group held a round table where participants shared experiences and best practices for implementing the 16 trade red flags as described in the BAFT paper: Guidance for Identifying Potentially Suspicious Activity in Letters of Credit and Documentary Collections, March 2015. Participants also exchanged experiences with automation, robotics, systems used for compliance screening, throughput expectations, and KYC processes.

Payment Fraud Indemnity: This group developed a Fraud Indemnity template, gathering information from European member banks as to jurisdictional restrictions and the feasibility of an indemnity. The group collaborated with a working group from the US, and expectations are that after MENA/Asia weigh in on the drafts, BAFT will publish templates for industry use.

Intra-day Liquidity: The Intra-day Liquidity Working group gathered information focused on specific aspects of liquidity management that are becoming more important for banks as a result of regulatory and other changes in the market. The results of the survey are being discussed by the working group who hope to develop a “best practices” paper on liquidity management that will be made available to BAFT members likely in 2019.

The Global Annual Meeting held in London this year attracted a record number of attendees and also served as the kick-off for the 2018 Future Leaders program.

Over the past year the Europe Council worked on various topics including TBML, payment fraud indemnity, and intra-day liquidity. The council established working groups to actively engage with the topics.

Patrick Gmür Credit Suisse

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Raffaele Martino Intesa Sanpaolo S.p.A.

2018 BAFT ANNUAL REVIEW

Europe Council Co-chairs The Europe Council has successfully engaged in topics being relevant to the banking industry in Europe. The group actively contributed via dedicated panels and round table discussions to produce tangible deliverables. The interaction in the community is very informative, stimulating and creating value for individuals and the organizations they are representing. We continue to be enthusiastic about the future development of the Europe Council and remain fully committed to support BAFT.


Regional Highlights – Asia

Membership in Asia experienced a 17% increase from 2017, making it BAFTs second-fastest growing region largely thanks to the support of the Asia Council. The Asia Council, is composed of senior level transaction bankers from 25 member banks in Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia and Singapore. In addition to quarterly meetings of the Asia Council, the Asia Trade Finance Committee brings together industry practitioners monthly to drive thought leadership around current trade finance trends, issues and solutions. The Asia Council continues to engage with regulators, particularly the Hong Kong Monetary Authority (HKMA) and the Monetary Authority of Singapore (MAS) to discuss trends and developments in the industry. BAFT Council members are involved in various regulator-driven FinTech initiatives, such as the HKMA initiative on blockchain and trade digitization, Singapore National Trade Platform, and the joint HKMA/MAS co-sponsored Global Trade Connectivity Network (GTCN) project which aims to interconnect trade ecosystems. In addition, the Asia Council has been a venue for members to stay updated and abreast of development and innovation in the area of distributed ledger technology and cyber innovation in Customer Security Programs (CSP), with invited experts from Microsoft and SWIFT providing updates to the Council.

On the issue of financial crime, BAFT supported industry awareness of regulatory expectations by organizing financial crime compliance workshops in Hong Kong and Shanghai, with a few more in the pipeline in China and Singapore for the remainder of 2018. Further, BAFT members were actively involved in the development of a TBML guidance paper published by a public-private sector task force – Anti-Money Laundering and Countering the Financing of Terrorism Industry Partnership (ACIP). ACIP was co-chaired by the Singapore Police Force Commercial Affairs Division (CAD) and MAS, and included several BAFT member organizations. BAFT also met with CAD separately to discuss the paper and TBML best practices seen in other jurisdictions, with an aim of promoting cross-jurisdictional consistency. In 2018, the Asia Council welcomed the election of Kai Fehr (Wells Fargo) as Asia Council Co-Chair. Based in Singapore, he will work alongside Vivek Gupta (ANZ) who is based in Hong Kong, giving BAFT balanced leadership and engagement with two of the most important public sector stakeholders in the region. In addition, BAFT is well integrated with the APFF initiatives providing input to the Finance and Trade Ministers in APEC. With Council leadership in place, BAFT in Asia is well positioned to continue to provide a forum for banks to drive policy, share best practices and execute on initiatives that affect the Transaction Banking business in the region. Going forward, the BAFT Asia Council priorities include advocating the principles outlined in the BAFT TBML paper, especially in light the recent MAS ACIP (Anti-Money Laundering and Countering the Financing of Terrorist Initiatives Partnership) initiative; education and advocacy on the implementation of Basel 3 across the region, with particular focus on China, India, Indonesia and Taiwan; and by continuing to provide input on regulatory issues, financial technology, financial crime compliance and other topics that represent member interests.

Asia Council Co-chairs

Kai Fehr Wells Fargo Bank

Vivek Gupta ANZ

Asia continues to be the fastest growing market for trade, capital flows and transaction banking. Additionally, we are seeing the emergence of industry leading blockchain based trade platforms in Hong Kong and Singapore; ditto for innovation in Payments. BAFT’s efforts over last year have helped increase engagement with key regulators and to attract new members to join BAFT. Our future efforts will be focused on further strengthening the BAFT Brand thereby being well placed to influence material outcomes e.g. on TBML, financial crime, Basel 3 etc.

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Regional Highlights – Middle-East / Africa

“CEO Views on Financial Services session with Tod Burwell (BAFT President & CEO), Saad Azhari (Board Chair and General Manager, BLOM BANK SAL) and André Sayegh (Deputy Group CEO First Abu Dhabi Bank) at 2018 MENA Bank to Bank Forum, Dubai last March.”

The Middle-East and Africa, comprised of two major regional segments – Middle East/North Africa (MENA), and SubSaharan Africa, was again an area of increased engagement for BAFT. Growth in MENA continued as the region now constitutes 10% of BAFT membership, compared to 3% when the MENA Council was launched only 3 years ago. With only its 2nd edition, the MENA Forum has become one of the main events in the region as it attracted nearly 200 attendees from MENA and beyond, a 27% growth in attendance from its debut in 2017.

In addition to undertaking the partnership with IIFM to develop the Islamic MRPA, the MENA Council has been focused on engagement in financial crime initiatives, providing a voice of the region in global policy dialogue, including the topic of correspondent banking de-risking. Going forward, the council intends to continue focus on de-risking and financial crime issues, as well as FinTech developments. A financial crime compliance workshop in Abu Dhabi is blanned for December 2018. There is a continued effort to broaden the membership to include banks from new countries, and considerations are being given to how BAFT can better leverage education programs for banks in Sub-Saharan Africa.

Ziad Ghosn (Bankmed), MENA Council Co-chair These achievements in a relatively short period of time would have not been possible without the collaborative work that the Council members and past Co-Chairs have put since the Council’s launch in 2015. I also take this opportunity to thank the BAFT Board and the CEO for their continuous support to MENA. I look forward to a continued success in the MENA region through a wider membership engagement, as well as a stronger representation of the region’s banks and its common interests in the global topics.

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2018 BAFT ANNUAL REVIEW


Training and Education In addition to our conferences and workshops, BAFT continues to deliver training and education through monthly committee and quarterly council meetings, where members are briefed on a variety of topics such as cybersecurity, innovation, financial crime/de-risking, regulatory changes, and various trade, payments or compliance related issues. Our Ask-the-Expert roundtables continue to offer members the opportunity to benchmark solutions to unusual problems in their business. Members are encouraged to engage your practitioners in one of the many committees and working groups accordingly.

CertPAY CertPAY is a Certificate in Principles of Payments that enables professionals working in the global payments industry to attain an internationally recognized qualification. Launched in 2017, it provides students with a comprehensive understanding of payments, from terminology to the mechanics of moving money across the globe, as well as compliance, risk, regulation, and strategy. Designed as a Level 3 qualification registered with Ofqual in the Regulated Qualifications Framework, CertPAY is a self-study course with an exam, and unlike a certification program, does not require periodic re-certification. •

Self-study - comprehensive study materials are provided covering principles of payments, payment regulation, risk & compliance

On-demand, multi-choice exams available internationally with same day results

HELPFUL HINT:

CDCS® - Certified Documentary Credit Specialist BAFT continues to offer the CDCS® exam twice per year (April/October), and provides accredited programs - BAFT trade finance workshops, conferences and webminars - for certificate holders to obtain required Continuing Professional Development learning hours (CPDs, formerly, PDUs) for recertification. This certification and its corresponding exam is globally recognized as the benchmark certification for documentary credit professionals and is held by more than 10,000 professionals globally. In 2018, BAFT expanded their CDCS footprint into Mexico which led to a 10% growth in registrations. In 2019, BAFT will explore CDCS preparatory courses for those needing additional study support to pass the exam. Globally, the course holds a 50% pass rate and in the U.S., slightly lower at 48%. BAFT will create structured study outlines, example case studies and virtual class room time with industry experts for those needing additional study prep.

E-Learning Webinars offer individuals the opportunity to hear from thought leaders on a variety of topics without having to travel to a conference, and are typically offered to BAFT members at no cost. Recent webinars include Big Bank, Small Bank: An Update on EXIM’s Realignments, The Rise of Open Account Trade: Technology and the Corporate Experience, and One Year Into the Trump Administration: The State of U.S. Regulatory and Tax Reform. Members can access all past webinars on the BAFT website www.baft.org/webinars. Interested in hosting webinars or to request a topic, please email info@baft.org

Learn more about payments and trade certifications, plus upcoming webinars at www.baft.org/education

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Conferences and Events Conferences and events remained the most widely utilized and highest rated (3.75/4.0) overall component of value for members, and as a result, have grown and evolved based on member needs. In 2018, BAFT offered events in new regions – Baku and Shanghai – and introduced new programs. Attendee engagement and number of conference attendees continue to grow each year, reflecting a 54% growth over 5 years.

Regional Conferences Continue to Break Records BAFT conferences provide a balance of timely industry topics with subject matter experts as speakers and networking opportunities for productive business meetings for attendees. Programs are offered in various regions of the world, increasing the accessibility for banks with limited travel budgets, and range from strategic level conferences to deep-dive workshops with case studies. In 2018, the signature regional conferences in MENA, Europe and North America continued to grow and break record attendance. •

BAFT’s premier conference, the North America Annual Conference, held last May in Orlando, FL attracted a record number of almost 450 attendees, representing 133 companies at the event.

The 2nd MENA Bank to Bank Forum held last March in Dubai, UAE, saw a 27% increase in attendees and an equally impressive 18% increase in number of institutions represented.

The Europe Bank to Bank Forum, back in London in 2018, attracted almost 300 attendees, a 25% increase in attendees and a 29% increase in companies represented.

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2018 BAFT ANNUAL REVIEW


You Asked. We Listened and Delivered. In response to conference evaluations asking to increase the focus on (US) regional bank issues, we launched our first ever regional bank workshop in 2018. This was an exclusive workshop created by regional bankers with program content specifically designed for regional bankers. More than 50% of the BAFT regional bank members attended, plus several nonmember banks and providers. The event was extremely well received by all, including non-members who saw the value of a BAFT membership, resulting in a couple of immediate new member additions.

We are a regional bank trying to expand our international capabilities, primarily in FX and Intl Trade (LCs, DC, SBLCs primarily).

Your topics provided insights into many of the challenges I am experiencing now as we embark on this expansion.” - Regional Bank Workshop attendee

I thought it was a very useful workshop that … addressed the subject matter in a meaningful way.

Speakers for the most part spoke about real business experiences

rather than textbook / theoretical situations. Thank you for the event.” - Regional Bank Workshop attendee

Expanded Conference Footprint and Financial Crime Compliance Offerings Since introducing the Financial Crime Compliance (FCC) Workshops in 2017, there has been a strong interest from members for this deeper-dive workshop, including special in-house/customized training. BAFT, in partnership with several of its members, offered special trainings in Stockholm, Sweden and Baku, Azerbaijan. A half-day, invite only Forum was also offered in Shanghai, China. All are new markets for BAFT events. In addition, the FCC workshop now has several program options available, depending on the city and or member need. FCC offerings include: •

FCC 1.0: a broader coverage of FCC topics, including customer due diligence, correspondent banking, transaction monitoring and sanctions.

FCC 2.0: deeper dive on trade based money laundering and correspondent banking.

FCC customized program: topics and length of program are planned based on specific member training needs.

In addition to offering the FCC workshops in new cities in 2019, we will be adding the FCC 3.0 – Respondents’ Playbook – an instructional workshop on what correspondent banks are looking for from respondent banks, based on the white paper expected to be delivered in late 2018.

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Save the Date While several of the BAFT program dates and location are in the process of being finalized, please mark your calendars for the following:

2018 BAFT Conferences and Workshops October 21 December 4 December 6

10th Annual Global Councils Forum (invite only event) Financial Crime Compliance – Singapore Financial Crime Compliance – Beijing (invite only event)

Sydney, Australia Singapore Beijing, China

2019 BAFT Conferences and Workshops January 14 – 16 January 21 January 24 – 25 February 14 -15 March 13-14 April 28 - May 1 May 1 June 26-27 June (TBD) July 11-12 July (TBD) September 22 October 23 October 23-25

Europe Bank to Bank Forum London, United Kingdom Financial Crime Compliance – Abu Dhabi Abu Dhabi, United Arab Emirates Canada Trade Finance Workshop Totonto, Canada Southeast Trade Finance Workshop Tampa, Florida MENA Bank to Bank Forum Dubai, United Arab Emirates Global Annual Meeting – The Americas San Diego, Califonia Financial Crime Compliance – North America San Diego, Califonia New York Trade Finance Workshop New York, New York Regional Bank Workshop Chicago, Illinois Global Payments Symposium New York, New York West Coast Trade Finance Workshop Los Angeles, Califonia 11th Global Councils Forum (invite only event) London, United Kingdom Supply Chain Finance Bootcamp Chicago, Illinois 29th Annual Conference on International Trade Chicago, Illinois

Events are subject to change. For conference updates and additional information, please email events@baft.org or visit www.baft.org/events.

HELPFUL HINT: Be the first to know. Sign up for alerts on conference and events at www.baft.org/alerts.

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2018 BAFT ANNUAL REVIEW


Sponsorships With the generous support of our sponsors, BAFT has been able to continue to offer its various initiatives for the good of the industry, while keeping registration costs from increasing at the same pace as hotel and meals costs. Further, with a growing number of members looking to increase their brand visibility, sponsorships offer an opportunity to increase the value of engagement in BAFT events. In 2018, total sponsorships and retention remained strong, reflecting the strong value of BAFT.

Sponsorships Increase in Number As conferences grew in attendance and offerings, both the number and the retention rate of former sponsors also increased. Organizations found increased value in the branding, speaking and engagement opportunities at BAFT events. In 2018, the number of total sponsorships increased by 22%, including a 24% increase in participation from non-banks, as they see value in thought leadership opportunities and ability to reach a targeted group in one place. In addition, sponsor retention was high, with an overall rate of 85% compared to a 75% industry benchmark rate.

*Industry benchmark from Center for Exhibition Industry Research

A Redesigned Affinity Program The Affinity Sponsor Program was redesigned to be more equitable for both financial institutions and non-bank members. The new program rewards members in a holistic approach, recognizing members for its support for the entire year, not just a specific sponsored event. Thus, Affinity members (Platinum, Gold or Silver Level) receive additional benefits such as choice of complimentary conference registration, access to attendee list of other non-sponsored events, distribution of white papers, beyond the specific sponsored event. The redesigned program was enthusiastically received with 17 members eligible for the benefits (12 financial institutions and 5 non-banks vs 14 financial institutions only in the prior year).

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SPECIAL THANKS TO OUR GENEROUS SPONSORS Generous sponsorships help provide the means to enhance the experience at BAFT events, and we extend our heartfelt thanks to the companies that lent their support this past year.

Affinity Sponsors

PLATINUM

GOLD

SILVER

The Bank of New York Mellon Kapital Bank Arab Bank Deutsche Bank Standard Chartered Bank Barclays BMO Capital Markets BNP Paribas CGI Citi Finastra Flywire ING Pelican PNC Bank Ripple Wells Fargo

Additional Sponsors Allied World

Deloitte

PrimeRevenue, Inc.

ANZ

DHL Express

RBC Investor & Treasury

Bank of America Merrill Lynch

Emirates NBD

Santander Bank, NA

Bankmed

Ernst & Young

Societe Generale

Banque Libano-Francaise

Federal Reserve Bank of Atlanta

Sullivan & Worcester

BBVA

Fenergo

Surecomp

Berkeley Research Group

Fifth Third Bank

SwapsTech

BLOM Bank

First Abu Dhabi Bank

SWIFT

Broadridge

GPS Capital Markets

Toronto-Dominion Bank

China Systems

HSBC Bank

TransferMate Global Payments

Cibar

IBM

U.S. Bank

City National Bank

Intesa Sanpaolo S.p.A.

UAE Exchange

Coastline Solutions software

INTL FCStone

UBS

Comerica Bank

iSoftware4Banks

Copp Clark

J.P. Morgan

University of Washington, Foster School of Business

Currency Exchange

Mashreq Bank

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2018 BAFT ANNUAL REVIEW


Expanding BAFTs Global Footprint BAFTs global community is growing at a record pace. In 2018, BAFT added 43 members and expanded into four new countries (Angola, Croatia, Czech Republic, Ukraine) bringing the new total to 281 members throughout 57 countries. Contributing to the sixth consecutive year in net new member growth were Solution Providers, which grew 21% from 2018. BAFT has now added 147 members over the past five years, largely driven by value derived from increased advocacy, thought leadership, training opportunities, and regional programs offered.

Member Satisfaction by the Numbers

and increase the number of employees to which BAFT can deliver value within member institutions. In 2018, BAFT finalized a scorecard to identify the extent to which member organizations utilize BAFT services. The Engagement Scorecard will be rolled out in FY19 which will facilitate more proactive outreach, and increase the vibrancy of the BAFT community. As always, BAFT looks to further grow its presence across various geographies, increasing the strength of advocacy for the transaction banking industry, and providing greater value through a more expansive community.

Membership satisfaction (96%) remained high, and was also reflected in a Net Promoter Score (44%). Nevertheless, we are constantly seeking to improve our value to members

BAFT Member by Region

51%

24% 10%

10%

4% 1%

BAFT Members by Type Banks

68%

Government

4%

Honorary

3%

Solution Providers

25%

2018 BAFT ANNUAL REVIEW

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Get the Most of Your Membership Get the most of your membership www.baft.org is a quick and easy way to review: •

Industry guidance papers and best practices

Upcoming conferences and events

Industry news

Educational Services and webinars

Contacts at BAFT members and Solution Providers

HELPFUL TIPS FOR: Setup your BAFT Account at www.baft.org/newuser •

When registering, use your company email address as your USER ID

Use the Company LookUp Feature to select your correct company name to ensure you are set up as a BAFT member.

Be sure to select your marketing preferences and be the first to hear about upcoming events and member updates.

Check out the Web Tutorial at www.baft.org/tutorial to navigate the BAFT site with ease!

• •

A Closer Look inside www.baft.org Update your preference for the latest on industry and BAFT initiatives, plus be alerted when conference registration is open.

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2018 BAFT ANNUAL REVIEW

The Policy section, holds our library of comment letters, whitepapers and industry tools and best practices.


Looking to connect? Check out the Member Directory for contact details of colleagues, providers, clients and prospects!

The Education portal provides users valuable information on programs such as CDCS and CertPAY, and access to past webinars.

DID YOU KNOW? BAFT is an institutional membership. All employees of BAFT Member Institutions/Companies worldwide are eligible to access all BAFT member benefits. Questions? Contact info@baft.org

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BAFT Members NEW MEMBERS

Financial Institutions

African Export-Import Bank

Abu Dhabi Commercial Bank

Al Salam Bank Bahrain

Abu Dhabi Islamic Bank

ALTBANK

Agricultural Bank of China

Banco Millennium Atlantco S.A.

BLOM BANK S.A.L.

Emirates NBD

BMCE Bank of Africa

Enterprise Bank & Trust

BMO Financial Group/BMO Bank Montreal

Fifth Third Bank

Al Salam Bank Bahrain

BNP Paribas/BNP Paribas Fortis

First Citizens Bank & Trust

Alfa-Bank

Bank of Beirut SAL

BNY Mellon

ALTBANK

Bankinter, S.A.

Amegy Bank of Texas

BOK Financial Corporation/ Bank of Oklahoma N.A.

Banque Misr - Paris Branch

Amsterdam Trade Bank

Bayerische Landesbank (BayernLB)

ANZ Banking Group Ltd

Burgan Bank

Arab Bank plc Arab Banking Corporation

CCRManager Pte Ltd

Arvest Bank

Cedrus Bank SAL

Associated Bank N.A.

Clyde & Co.

Banco Bradesco SA

Create Trade Capital Enterprise Bank & Trust

Banco de Credito del Peru (BCP) – Miami Agency

Branch Banking & Trust Company (BB&T) Bridge Bank Brown Brothers Harriman & Company Burgan Bank Byblos Bank SAL Caisse centrale Desjardins California Bank & Trust

First Abu Dhabi Bank (FAB) First Hawaiian Bank First National Bank of Omaha First National Bank of Pennsylvania First Tennessee Bank N.A. Frost Bank Fulton Financial Corporation Gulf International Bank B.S.C. (GIB) Habib Bank International (HBL) Hancock Holding Company/ Hancock Bank

FI.SPAN

Banco de Sabadell, S.A.

Capital One N.A.

First Citizens Bank & Trust

Cayman National Bank

HSBC

Flywire

Banco Millennium Atlantico S.A.

Cedrus Bank SAL

Huntington National Bank

Gene Neyer

Banco Popolare S.C.

China Construction Bank

ICICI Bank Limited

Gulf International Bank B.S.C.

Banco Santander

CIBC - Canadian Imperial Bank of Commerce

ID Bank

Hogan Lovells LLP HyperWallet

Bank Leumi le

CIMB Group

Industrial & Commercial Bank of China Ltd. (ICBC)

Bank of America Merrill Lynch

Citigroup Inc

ING Group

Citizens Bank, N.A.

Intesa Sanpaolo S.p.A.

Bank of Beirut

City National Bank

INTRUST Bank, N.A.

King & Spaulding LLP

Bank of China

City National Bank of Florida

Investec Bank Limited

McKinsey & Company

Bank of Hawaii

CoBank ACB

Jamuna Bank Limited

Meridian Finance Group

Bank of Hope

Columbia Bank

JPMorgan Chase & Co.

Morrison & Foerster LLP

Bank of Tampa

Comerica Bank

Kapital Bank

Mutual Trust Bank Limited

Bank of the Bahamas

Commerce Bank N.A.

KBC Bank N.V.

Pacific Western Bank

Bank of the West Bankers Trust Company

Commercial Bank of Africa Limited

Key Bank

PlainsCapital Bank PT Bank Negara Indonesia (Persero) Tbk.

Bankinter, S.A.

RAKBANK

BankUnited

Saudi Investment Bank

Banner Bank

Sigma Ratings Inc.

Banque Misr SAE – Paris Branch

International Islamic Trade Finance Corporation (ITFC)

The Provident Bank TradeIX Limited Tradeteq Limited TransferMate Global Payments Visa Inc. WebPort Global Webster Bank XMLdation Zenith Insured Credit

32

Bank Audi sal

Bankmed

Commerzbank AG

Lake Forest Bank & Trust Company

Commonwealth Bank Ltd

Lloyds Bank plc

Commonwealth Bank of Australia Limited

Mabrey Bank

Crédit Agricole

Manufacturers and Traders Trust Company

Crédit Industriel et Commercial (CIC)

Manufacturers Bank

Credit Suisse

Barclays Bank PLC

CrossFirst Bank

Mauritius Commercial Bank Limited

Bayerische Landesbank (BayernLB)

Danske Bank A/S

mBank

Deutsche Bank AG

MB Financial

BBVA - Banco Bilbao Vizcaya Argentaria S.A.

DNB BANK ASA

Millennium BCP (Banco Comercial Portugues SA)

Banque Libano-Francaise SAL

BLADEX - Banco Latinamericano de Exportaciones S.A.

2018 BAFT ANNUAL REVIEW

DZ Bank AG - New York Branch

MashreqBank Psc

Mizuho Corporate Bank Ltd.

East West Bank

Mutual Trust Bank Limited

EBI/SA Ecobank Group

National Australia Bank Ltd


National Bank of Canada

Sumitomo Mitsui Banking Corporation

Bunge Global Agribusiness

PrimeRevenue, Inc.

Camstoll Group (The)

SunTrust Banks

Cargill Incorporated

Private Export Funding Corporation (PEFCO)

National Bank of Kuwait

SVB Financial Group

CCRManager PTE Ltd

Natixis

Svenska Handelsbanken AB (publ)

CGI

NBAD Americas N.V. Nedbank

Swedbank

NORD/LB - Norddeutsche Landesbank

Synovus Bank

Girozentrale

Texas Capital Bank NA

Nordea Bank

The Bank of East Asia Limited

National Bank of Egypt – New York Office

North Shore Community Bank Northern Trust Company

TD Bank Financial Group

The Bank of TokyoMitsubishi UFJ Ltd.

Oversea-Chinese Banking Corporation (OCBC)

The Provident Bank

Pacific Western Bank

U.S. Bancorp

People’s United Bank

UBS AG

PlainsCapital Bank

UMB Bank

PNC Bank NA

Umpqua Holdings Corporation

PT Bank Central Asia TBK (BCA)

Turk Ekonomi Bankasi A.S.

UniCredit

Clifford Chance US LLP Clyde & Co. Coastline Software Solutions Copp Clark Limited Create Trade Capital Currency Exchange International

R3 (Distributed ledger Group LLC) Ripple Sigma Ratings Inc. Skuchain Sullivan & Cromwell Sullivan & Worcester Surecomp SwapsTech

Deloitte

SWIFT

Dentons

Taylor Wessing LLP

EIA-Global

TradeIX Limited

Ernst & Young

Tradeteq Limited

FCIA Management Company Incorporated

TransferMate Global Payments

FImetrix

Visa Inc.

Finastra

WebPort Global

FIS Global

Western Union Business Solutions

PT Bank Negara Indonesia (Persero) Tbk – New York Office

Union Bank

FI.SPAN

United Bank for Africa PLC New York Branch

Flywire Gene Neyer

Raiffeisen Bank International AG (RBI)

United Bank Limited (UBL) New York Branch

Global Advantage

RAKBANK

Washington Trust Bank

Rand Merchant Bank

GTB Insights LLC

Government Agency Members

Webster Bank

RBC Financial Group/The Royal Bank of Canada

Hogan & Lovells LLP

Wells Fargo Bank NA

African Export-Import Bank

Hyperwallet

Westpac Banking Corporation

Delcredere l Ducroire

IBM Corporation

Export Development Canada

IIG Trade Finance LLC

Export-Import Bank of the United States

RBS - The Royal Bank of Scotland Group Regions Bank

Whitney Bank

Republic Bank Ltd.

Wintrust Financial Corporation

Rockland Trust Company

Wirecard Bank AG

Santander Bank, NA

Zions Bancorporation

Saradar Bank

Zürcher Kantonalbank

Saudi Investment Bank

GPS Capital Markets

International Risk Consultants, Inc. INLT FC Stone Inc. JLT Specialty King & Spaulding LLP LiquidX, Inc. Mayer Brown LLP

Scotiabank/The Bank of Nova Scotia

Solution Providers

SEB - Skandinaviska Enskilda Banken AB

Allen & Overy LLP

Meridian Finance

Arnold & Porter Kaye Scholer LLP

Morrison & Foerster LLP

Atrafin LLC

Navigant

Berkeley Research Group LLC

Mphasis

BIX Security Corporation

Premium Technology Inc.

Société Générale Société Générale de Banque au Liban Standard Bank Group Limited Standard Chartered Bank Ltd. State Bank of India

BlackRock Broadridge Financial Solutions

McKinsey & Company

XMLdation Zenith Insured Credit

Federal Reserve Bank of Chicago Global Coalition for Efficient Logistics (GCEL) International Islamic Trade Finance Corporation (ITFC) Japan Bank for International Cooperation U.S. Department of the Treasury (OFAC)

Moses & Singer LLP

Pelican

Industry Association The Clearing House

PricewaterhouseCoopers LLP

2018 BAFT ANNUAL REVIEW

33


FY2018 | BAFT BOARD OF DIRECTORS EXECUTIVE COMMITTEE

Chair

Vice-Chair

Secretary-Treasurer

President & CEO

Kimberly Burdette PNC Bank, NA

David Scola Barclays

Mark Garfield Zions Bancorporation

Tod Burwell BAFT

Esther Galiana BBVA

James Peterson Northern Trust

Patricia Gomes HSBC

Stephanie Wolf Bank of America Merrill Lynch

34

2018 BAFT ANNUAL REVIEW


DIRECTORS

John Ahearn Citi (Past Chair)

F. H. Ahlborn US Bank

Jonathan Elkins National Bank of Canada

Kai Fehr Wells Fargo Bank N.A.

Ziad Ghosn Bankmed

Patrick Gmür Credit Suisse

Vivek Gupta ANZ

Steven Lotito MUFG

Raffaele Martino Intesa Sanpaolo S.p.A.

Tarik Muzaffar TD Bank

Ulf-Peter Noetzel Deutsche Bank

Michael Quinn JP Morgan

Miriam Ratkovicova Deloitte

Amy Sahm Fulton Financial Corporation

Serena Smith FIS Global

Christian Stolcke UBS

Suresh Subramanian BNP Paribas

Vineet Varma First Abu Dhabi Bank

Juliette Lascoux SEB

Peter Zotos Standard Chartered Bank

2018 BAFT ANNUAL REVIEW

35


BAFT STAFF Tod Burwell President & Chief Executive Officer (202) 663-5252 tburwell@baft.org Stacey Facter Senior Vice President Trade Products (202) 663-5254 sfacter@baft.org Samantha Pelosi Senior Vice President Payments & Innovation (202) 663-5537 spelosi@baft.org Diana Rodriguez Senior Director International Policy 202-663-5514 drodriguez@baft.org

Arlene Sanchez Vice President Marketing & Events (202) 663-5532 asanchez@baft.org Kathryn Hoch Senior Manager Programs & Events (202) 663-5536 khoch@baft.org Nancy Monahan Senior Manager Business Development (202) 663-5530 nmonahan@baft.org Carrie Hannigan Marketing Manager (202)-663-5511 channigan@baft.org

Shawn Haynes Senior Director Operations & Business Management (202) 663-7534 shaynes@baft.org

Channing Daniel Director, Membership (202) 663-5534 cdaniel@baft.org

General Inquiries info@baft.org

Programs & Events events@baft.org

Membership Inquiries membership@baft.org

CDCS Inquiries cdcs@baft.org

More Ways to Stay Connected Twitter: @BAFT_Global Linkedin: www.linkedin.com/groups/1842798 1120 Connecticut Avenue, NW, Washington, DC 20036, USA BAFT.org | Phone: +1 (202) 663-7575 | Fax: +1 (202) 663-5538

36

2018 BAFT ANNUAL REVIEW

2018 BAFT Annual Review  

The 2018 BAFT Annual Review highlights initiatives BAFT worked on behalf of its membership, from advocacy and education to best practices an...

2018 BAFT Annual Review  

The 2018 BAFT Annual Review highlights initiatives BAFT worked on behalf of its membership, from advocacy and education to best practices an...