INSIGHTS byNordea Transaction Banking
INSIGHTS by Nordea Transaction Banking

Compliance in trade finance: an opportunity, not a threat

For many years companies have used trade finance instruments in order to manage risks when exporting and importing goods internationally. Trade finance ensures that cross-border business is protected against late payments, delayed delivery, geopolitical instability, currency fluctuations, and other known and unknown risk factors.

Compliance in trade finance: an opportunity, not a threat

Trade finance remains a prudent way for any company to do business internationally, given continuing risks to trade caused by, for example, turmoil in the Ukraine, the Euro crisis, and tensions in the Middle East and South America. 

You want to cut risk — so do we

As a trade finance provider we also want to do business prudently, to protect our reputation, our business, and our customers. Would you want a bank to operate any other way?

At Nordea in particular, as a Systemically Important Financial Institution (SIFI), we have to live up to the highest standards. So you can trust that when you use our services, we are doing it right.


"Risk management and compliance are more important in the financial industry than ever before. For us, they are also part of building genuine relationships with our customers.”

Ari Kaperi, Group Chief Risk Officer.

Find out more about our approach to responsible banking in our CSR Report.


The growing importance of compliance 

Today, being prudent is not just about managing operational and market risks. It is also about managing compliance with a growing body of regulations, which in trade finance relate to: 

  • Anti-money-laundering — Detecting and preventing money laundering by using behavioural profiling techniques, and reporting suspicious activities to the authorities. 
  • Counter-terrorism and international sanctions — Ensuring that transactions and customers subject to sanctions are screened, using complex matching algorithms against official sanction lists (OFAC, EU, UN). Screening customers to identify politically exposed persons. 
  • Verifying trading partners’ banks as part of ‘know your customer’ (KYC) regulation. 


Reduced risk is not the only benefit 

Banks take these regulations seriously — those that fail to meet their obligations have suffered fines, in some cases of more than a billion dollars. But what does compliance mean for you as an organisation involved in international trade? 

Compliance is clearly an important part of risk management — it can help you achieve your original objective of reducing risk and doing business more efficiently, as well as helping you live up to your own standards for corporate social responsibility. When your bank checks that your trade partners are not on any sanctions list and that their banks are legitimate, it gives you reassurance that you can trade with confidence. 

What compliance involves 

Compliance regulation has a very real effect on how trade finance transactions happen. For instance, KYC involves many checks both during new transaction setup and periodic review. Before we at Nordea can proceed with a transaction we need to obtain a long list of documents from the organisation; investigate its legal structure; screen for politically exposed persons (PEPs); score and classify risk; and archive the reviewed documents. Getting hold of the required documents in a timely manner can be challenging, particularly in emerging economies where banking and trading environments are less structured. 

Transactions are also scanned in real time for sanction violations and suspected money-laundering, with many different parties investigating alerts and reporting to the relevant authorities. It is a thorough and intensive process. 

To learn more about the checks we make as part of KYC regulation, and what it means for you, read this article

Minimising the impact on your trade 

You might naturally be concerned that these checks will slow your transactions down, add extra costs, and even result in transactions being mistakenly blocked due to excessive caution. 

It does not have to be that way. Compliance, when managed effectively by your trade finance provider, can actually be a facilitator for international trade. And rest assured that we are working hard to make sure that these processes have minimal impact on your business and the service levels we offer.

So how are we working to achieve this?

We are continually optimising our global network of banks — ceasing to deal with those that do not meet the necessary standards, and deepening our relationship with those that are a safe partner for you and your trading counterparts.


Our network currently consists of more than 1,750 banks in 150 countries. We are particularly focusing on building up these relationships in growth areas, such as Africa and China, giving you safe access to trade around the world.


Because we know each bank in our network thoroughly, we are compliant with the strict requirements of KYC regulation when you choose to use them for your trade finance transaction. Banks in our networks have been verified by us to offer responsive, accurate service and financial stability. These are all important factors when you are completing a major transaction in a distant region. 

Trust is more important than ever 

The strength of our network is just one of many reasons why we have won awards across the Nordics for our trade finance. We offer a broad range of high-quality services, and most importantly a high level of trust, built up over years of experience. As part of our ethos of being a relationship bank, we want to share that experience with our customers — so we are always happy to talk about the implications of compliance for your business, and to recommend the appropriate trade finance instrument for your particular transaction and your particular business partner, to make sure that you are protected against risk, at the right cost. To find out more, contact your Trade Finance Adviser. 

Kim Sindberg, is Executive Adviser, Trade Finance at Nordea


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