One of the most commonly used words when talking about cross-border payments is 'ease'. After all, today's technologies allow virtually instantaneous transfers between global merchants and their customers in different parts of the world. But for this to happen securely and reliably, technological advances must be accompanied by proper compliance. In other words, it is necessary to ensure that operations comply with all 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 watchword of corporate governance, compliance aims to ensure high ethical and legal standards in business. No wonder it is a key element in cross-border payments, ensuring transparency, legal compliance, and the prevention of fraud and money laundering.
Compliance’s importance is also reflected in the amount of money invested in it. According to a LexisNexis survey, global financial institutions' spending on compliance is increasing year on year. For example, the True Cost of Financial Crime Compliance Study found that this investment will exceed $274 billion in 2022 - a significant increase from around $214 billion the previous year. The investment recorded in 2021 was also significantly higher than the $181 billion recorded 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, heavy fines. In terms of reputation, a single slip can irreparably undermine stakeholder confidence. As a result, customers may delay payments, disrupt cash flow, or even stop doing business with the company.
Put simply, there are four main processes involved in cross-border payments. The first is the collection and verification of the user's identity. International watch lists can be consulted to check for possible sanctions or other specificities. For high-risk transactions or customers, due diligence is another crucial process. This is a kind of "preliminary investigation" to gather information on specific issues that could affect the deal.
An even more essential aspect of cross-border payments is monitoring unusual patterns and behaviours. All transactions are analysed to identify those that deviate from the expected. If necessary, suspicious activities are investigated and reported at this stage.
Finally, one of the most fundamental aspects of compliance is Anti-Money Laundering and Combating the Financing of Terrorism (AML/CTF). Several technologies are currently available for this purpose - and they are constantly evolving. At Bazk, for example, anti-fraud expertise is integrated into APIs, and AML/CTF monitoring uses artificial intelligence resources. This enables the system to act predictively, identifying risks quickly and accurately.
According to the 2023 Compliance Trends Report, 91% of organisations plan to implement continuous compliance solutions in their operations over the next few years. This movement is largely driven by the negative consequences that many have faced as a result of non-compliance.
In general, many executives have realised that the lack of compliance has resulted in significant losses, encouraging them to take stricter measures to ensure continuous compliance and avoid future problems. In addition, 75% of business leaders said that adopting compliance practices has helped their business in several ways. In the marketplace, companies that strictly adhere to these standards are viewed more positively by stakeholders and contribute significantly to business success.
However, international companies must pay special attention to the digital security issues involved in cross-border payments. For them to be successful, they must first and foremost adapt their operations to the specific requirements and regulations of each region in which they operate. Security and reliability of transactions are key to the success of businesses and their customers, which is why privacy laws, such as Brazil's General Data Protection Law (LGPD), are essential.
When you consider the risks associated with data breaches, the importance of these regulations becomes clear. Not only do these incidents compromise the integrity of consumer data, they also put business operations at risk. After all, breaches can lead to compensation claims, lawsuits, and reputational damage. According to a study published by IBM, a data breach can cost more than $4.2 million.
It is estimated that companies in the United States invest an average of $78 million per year to help them protect themselves against these threats. As a result of this investment, it has been estimated that more than half of organizations have experienced some form of cyberattack in just one year. Globally, these crimes are soaring, highlighting the need for effective and proactive policy compliance measures to protect internal and external data stored on their servers.
As a result, implementing continuous compliance solutions and adapting to data protection regulations are urgent steps for all global merchants. With the help of these practices, you can help ensure regulatory compliance, protect the integrity of your data, enhance your reputation as well as mitigate the financial risks associated with breaches of data and cyber-attacks.
Cross-border payments are at the core of international trade, especially in markets like Brazil. They enable fast and secure transactions between different countries, promoting the continuous flow of goods and services. Like other Latin American countries, Brazil has a diverse economy driven by rich regional cultures. This favorable environment has stimulated exponential growth in online shopping, making it fertile ground for expansion by global companies.
A significant challenge, however, is the volatility of currencies and exchange rates. The instability of local currencies can result in unexpected costs that impact operational profitability. Companies therefore need to invest in price transparency. This includes diversifying transaction currencies to reduce the impact of exchange rate fluctuations, and adopting different payment methods to remain competitive in the global marketplace.
In other words, you need to be versatile and flexible enough to adapt to local payment preferences. Especially in Brazil, these can include everything from credit cards to the modern Pix. This is where Bazk comes in, simplifying access to the Latin American market with secure and reliable solutions for local and cross-border payments, integrating different platforms.
After all, by offering payment solutions that meet customers' expectations and realities, global merchants can attract and retain consumers and ensure success in the international market.
Furthermore, one of the main barriers to doing business in Latin America is the regulatory landscape, which is quite complicated. The rules governing cross-border payments differ from country to country, including tax, customs, and compliance requirements that need to be observed. To avoid legal issues and ensure a continuous flow of transactions, it is essential to comply with these regulations.
As we know, there are many parties involved in cross-border payment transactions: the users, the beneficiaries, the financial institutions, and the regulatory authorities, for example. As a result, the assurance of security and compliance with all requirements is an additional layer of complexity. However, global merchants can simplify things with payment partners like Bazk - a Brazilian company with a compliance-first approach.
Bazk is committed to operating by the highest standards of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CTF). To this end, the payment gateway applies a risk-based approach to financial partners, merchants, and users. All with full process transparency and regulatory compliance, including artificial intelligence resources.
With Bazk, a single integration is enough for a fast, transparent, and secure experience with connectivity to multiple financial institutions. This allows global merchants to access the vast Brazilian market with maximum security and without worrying about the local regulatory system. In addition, these international transactions can be processed using the major Brazilian payment methods - including Pix.
At Bazk, integrity is of the utmost importance. We are 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 local and international payments without complications, talk to us!
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