Latin Finance - June 2008 - 47

treasury and cash management enhanced visibility of cash positioning. It should be noted that a Euro payment can only be executed as a SEPA transaction if the account location of the originating customer and the account location of the beneficiary are maintained with a bank within the SEPA countries. Therefore, a transaction can never be executed as a SEPA Credit Transfer if a financial institution located in Latin America which is outside of SEPA is involved anywhere in the payment chain. Financial institutions outside of SEPA also need to understand the basics of SEPA as their customers may ask how to execute SEPA transactions in order to benefit from potentially lower fees. In this case, customers should be informed that the SEPA payment is not feasible unless a customer’s Euro account is directly maintained with another bank inside the SEPA zone. Another indirect impact of SEPA is that banks throughout Latin America are increasingly being asked to include the beneficiary’s International Bank Account Number (IBAN) in their transfer instruction. While Euro payments initiated by Latin American banks through the high value payment channel using SWIFT MT103, are not required to include an IBAN, Deutsche Bank recommends that remitting banks begin to ask remitters to provide IBANs in their payment instructions. This best market practice will benefit all over the long term. To assist clients in managing liquidity, Deutsche Bank was the first institution to successfully launch the autoreport mode of SWIFTNet Cash Reporting. Clients benefit from robust real-time cash reporting, allowing them to further improve their reconcilement and intraday cash management. By offering both auto-report and query functionality, clients have the flexibility that they require – receiving information at regular pre-defined intervals or alternatively upon self-initiated request. Deutsche Bank has worked closely with clients to customize SWIFTNet cash reporting capabilities so that they can better manage positions and streamline their back office. More timely accessibility and improved quality of account information allow clients to more accurately calculate cash forecasts strengthening liquidity management and improving intraday risk management. Mitigating Risk –Recommendations on Wire Transfers The Financial Action Task Force Special Recommendation on Wire Transfers (FATF SR VII) was implemented via the EU Regulation 1781/2006 in 2007 to strengthen the monitoring of payments to combat money laundering. FATF SR VII requires information of the payer to be included within the commercial payment instruction. During 2007, banks worldwide adjusted their payment infrastructure to assure adherence to the new regulation. Some financial institutions continue to send payments without the required information due to contradictory local regulations or to complexities within their customer information database. Beneficiary banks receiving payments without payer information are required by law to investigate in order to fulfill the legal requirements and avoid penalties which, according to the EU regulation 1781/2006, became possible after December 15, 2007. Since inception, initial reactions from the market have shown an increased number of investigations across the industry and in some cases, payments missing information have been returned. Financial institutions in Latin America should take care to ensure that their payment orders contain complete information on the payer and beneficiary. SWIFTNet Cash Reporting Since mid-2007 when the credit-market turmoil began, there has been an increasing emphasis on intra-day liquidity management. Real-time access to intra-day cash positions in accounts is not only seen as a way to improve profitability but as a way to manage risk. Outlook for 2008 and Beyond The Payment Services Directive (PSD), which is due to be implemented in 2009, provides the foundation for a harmonized payment environment across the EU. As a Directive, the PSD does not directly come into full force all at once, but has to be individually implemented in local law with a certain margin of discretion by EU member states by 2009. The PSD will have a direct impact on payment processing procedures, such as the charge handling, i.e., full amount principle or value dating. It will also lead to increased competition within the payment industry as the PSD allows non-banks to act as payment service providers. Greater clarity and simplicity in charging mechanisms are accelerating the trend towards bank consolidation as it is more economical for banks and corporations to access a complete range of payment channels through a single provider. In the highly competitive Euro clearing market, the future is looking brighter for banks with the scale to make investments in technology and infrastructure to bring efficiencies and user-friendliness to their clients. I The information contained herein does not constitute and shall not be construed to constitute tax or legal advice by Deutsche Bank AG or any of its affiliates, including Deutsche Bank Trust Company Americas (collectively “Deutsche Bank”), nor shall this article or the content herein be construed as advice, an offer or a solicitation of any nature whatsoever nor is this article or its contents intended to be relied upon by any person. Deutsche Bank is providing this article strictly for information purposes and makes no representation as to the accuracy, completeness, or timeliness of such information. Deutsche Bank shall not be held liable for the authentication of or compliance with the information contained herein nor does Deutsche Bank assume any obligation to update any such information. Individuals should consult with their tax or legal advisor regarding their particular situation. The views and opinions expressed herein or in any referenced document do not necessarily state or reflect those of Deutsche Bank or any of its employees, officers or affiliates. No part of this article may be copied or reproduced in any way without the prior written consent of Deutsche Bank. Copyright 2008 Deutsche Bank AG. Deutsche Bank Charles Kohler – Americas Head of Financial Institutions, Global Transaction Banking Phone: +1.212.250.8668 Email: charles.kohler@db.com Website: www.db.com 2008 LATINFINANCE 47 guide

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Latin Finance - June 2008

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