Financial Compliance After 2016:
There are two basic types of major Infrastructure Projects which require structured Financing. These are Private Enterprise Investing projects and Infrastructure Financing projects. Both types are implemented over a number of years and require large amounts of cash.
In the past, large-scale infrastructure projects were initiated simply by the project promoter making the proper financial engineering arrangements with the Banks and everything would proceed as planned.
Since 1970, however, a great number of criminal activity control regulations have been imposed on the Banks to control criminal behaviors such as corruption, money laundering and so on.
Following the 2008 Financial Crisis, the US Congress passed the Dodd-Frank law which was soon followed in Europe by the BASEL III set of laws that started in 2013. This group of laws is known as Banking Compliance, their aim being to limit the risks taken by Banks.
Today, violation of any one of these laws subjects the Bank to Billion Dollar fines and sometimes prison sentences for the Bank’s Executives.
The end result is that it has become extremely difficult and costly for the Banks to pay out any large sums of cash, even when the cash rightfully belongs to a client. This is true for both Corporate Clients and Private Individuals.
This is happening because large pay-outs will deplete the balance sheet of the Bank. To pay out substantial sums the Bank must now follow a complex financial engineering process to cover their exposure with adequate collateral.
Please Note: this is a highly simplified description of what is happening today.
Banking Compliance demands a lot of Due Diligence data to satisfy various Criminal Laws’ investigation requirements. In addition, depending on the Project Value and the rate of outlays, adequate collateral must be gathered.
This activity does not fall under traditional banking operations and, despite spending billions every year on its development, Banks are ill-equipped and staffed for this type of work.
The Bank’s Corporate and Private Individual clients do not know what is expected from them and, in most cases, they do not know how to collect the data, most of which is readily available.
In addition, the Bank is also required to guarantee that no cash movement will violate any of the compliance laws during the life of the Project.
This represents a huge and real-time data requirement. In many cases, this causes frustration between the Banks and its clients and many projects go unfunded unnecessarily.
Global Project Engineering is offering to provide all the data required by the Banks in order to facilitate and speed up Project Funding and implementation.
At all stages Global Project Engineering services fulfills and exceeds the regulatory requirements of the Banks, thereby offering greater visibility for Project Managers from the beginning to the end of the Project – thus helping them to avoid costly project delays or losses.
For more information please contact Global Project Engineering.
Global Project Engineering
1 Carrefour de Rive
1207 Geneva – Switzerland
Tel : + 41 22 735 7900