When it comes to cross-border payments, convenience is undoubtedly one of the most used words. After all, today's technologies enable virtually instantaneous transfers between global merchants and their customers in many different parts of the world. However, to do so safely and reliably, technological advances must be accompanied by proper compliance. In other words, it is necessary to ensure that operations are carried out in compliance with all the applicable regulations and guidelines.
Therefore, in addition to international and regional regulations and treaties, it is essential to carefully observe the legislation of the countries involved. In Brazil, for example, there are various laws and central bank resolutions on issues such as foreign exchange and international capital.
Almost a mantra of corporate governance, compliance aims to ensure high ethical and legal standards in the business world. No wonder it is a key element in cross-border payments, ensuring transparency, legal compliance and the prevention of fraud and money laundering. The importance of compliance is also clearly shown in the amounts invested in this area. According to research by LexisNexis, global spending by financial institutions on compliance is growing year on year.
There was an investment of over $274 billion in 2022, according to the "True Cost of Financial Crime Compliance Study" report. This represents a significant increase compared to the approximately $214 billion spent the previous year. In turn, the investment recorded in 2021 had already been much higher than the $181 billion spent in 2020.
As you can see, compliance is essential for global organisations to mitigate risk and protect their customers. Compliance also prevents reputational damage and, not least, costly fines. In terms of reputation, a single slip-up can irreparably damage stakeholder trust. As a result, customers may delay payments, which may disrupt cash flow, or even discontinue doing business with the company.
In simplified terms, it can be said that compliance encompasses four main processes when it comes to cross-border payment transactions. First, the identification and verification of the user's identity. This may involve checking international watch lists for possible sanctions or other particularities. For transactions or customers with a high-risk profile, another crucial procedure is due diligence. This is a kind of preliminary investigation to gather information on specific aspects that could affect the operation.
However, an even more essential aspect of cross-border payments is the monitoring of unusual patterns and behaviour. To this end, all transactions are analysed to identify those that deviate from what is expected. If necessary, suspicious activity is also investigated and reported at this stage.
Finally, one of the significant focal points of compliance is anti-money Laundering and Countering the Financing of Terrorism (AML/CFT). For this, there are several technologies available today, and advancements are constant. In fact, at Bazk, anti-fraud expertise is integrated into APIs, and AML/CFT monitoring employs Artificial Intelligence resources. In this way, the system can act predictively and identify risks quickly and accurately.
Cross-Border Payment Transactions involve many parties: users, beneficiaries, financial institutions, and regulatory authorities, for example. For this reason, ensuring security and compliance adds a layer of complexity to the operation. However, global merchants can simplify things with payment partners like Bazk - a Brazilian company with a compliance-first mindset.
Operating in compliance with the highest Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) standards is a fundamental commitment of Bazk. For this purpose, the payment gateway conducts a risk-based approach analysis for financial partners, merchants, and users. All of this is with total transparency in processes and compliance with regulatory requirements, including the use of artificial intelligence resources.
With Bazk, a single integration is enough to guarantee a fast, transparent, and secure experience connected to multiple financial institutions. In this way, global merchants can access the vast Brazilian market with maximum security and without worrying about the local regulatory system.
What's more, these international transactions can be settled using the main payment methods in Brazil - such as Pix. Bazk is committed to integrity. This makes it a trusted strategic partner to ensure regulatory compliance and scale your results in Brazil. If your business is looking for security, stability, agility and connectivity for hassle-free local and international payments, get in touch!
