Banks impart safety to foreign trade transactions

A webinar this Wednesday morning (8) covered available banking instruments to ensure safe transactions for Brazilian and Arab product importers and exporters alike.

Bruna Garcia Fonseca

São Paulo – Banking instruments currently in existence make it safe to receive and make export- and import-related payments, said Gustavo Pieratti (pictured above), head of International Relations with bank BS2, during a webinar hosted by the Arab Brazilian Chamber of Commerce (ABCC) this Wednesday morning (8). The webinar was viewed by approximately 800 people in Brazil and the world over. BS2 is a digital financial institution active in banking, investment, payment methods, foreign exchange and credit.

“Current tools for control, auditing and knowledge are very high-level. It’s hard to do a non-compliant banking transaction without the consent of one of the parties,” said Pieratti. The Belo Horizonte, Minas Gerais-based BS2 has been in business for 28 years.

Pieratti likened banks to shields that protect commercial transactions from fraud attempts and hackers, through banking instruments such as compliance, internal controls, due diligence, and credit instruments designed to keep clients safe.

“Brazilian-Arab bilateral trade amounted to about USD 18 billion last year, with 100% of deals made through banking transactions and advance payments via credit instruments. Oversight of these payment methods is very strong. Compliance is the name of the game these days. You can’t get away with anything at all, everything gets accounted for,” he said.

The ABCC’s Ruy Cury

The webinar was moderated by ABCC Foreign Trade vice president Ruy Carlos Cury. He said that “exporting means selling, and selling means getting paid. Importing means buying, and buying means paying up.” He argued that taking care when it comes to documentation and legal issues is important, since it helps keep Arab and Brazilian importers and exporters hassle-free.

For Cury, partnering up with the banking system for foreign trade is very important towards ensuring operations go smoothly. “Nowadays, having the [banking] system participate is a legal obligation, due to foreign exchange issues. Banks are key partners in commercial transactions,” he said.

Banking safety was also discussed by National Bank of Fujairah, UAE head of Trade Services Madhavan Rajagopalan. The bank is active in corporate and trade finance and advisory on Islamic finance, among other things.

The National Bank of Fujairah’s Madhavan Rajagopalan

According to Rajagopalan, multiple instruments are available when it comes to banking safety in imports and exports. He mentioned due diligence and know your customer (KYC) as two cases in point. “In advising importers and exporters, we provide a checklist of actions, from choice of instrument to shipping company. This is our primary role, and it means safer shipping of goods,” he said.

He also stressed the need to ship out product with intermediation from a bank, rather than direct to the buyer, which means added safety for exporters. “With a bill of lading, the bank will know what the terms of payment are. This document must be in place, as well a receipt of goods with stated details. In this case, the bank is like an agent for the exporter. It will simply follow all of the exporter’s instructions for added control and safety,” he said.

As far as importers are concerned, Rajagopalan said they must make sure that product inspection is available. “There are many inspection agencies available, and you must choose a reputable agency. This means increased safety and comfort for both parties, the seller and the buyer. Then your interests will be protected,” he said. he also mentioned letters of credit as a banking instrument that can lead to safer transactions.

The conference also featured Danilo Garcia of the company CECIL, which exports defense industry products to governments, and Abdel Rahman, of Egypt’s Al Shahed Group. They related issues encountered in foreign trade transactions, which the speakers then commented on.

This is the 10th webinar hosted by the ABCC since the Covid-19 pandemic broke out. The online events cover relevant topics to the continuation of business transactions Brazilian-Arab relations. The ABCC’s Investment director Daniel Hannun and Commercial manager Daniella Leite were also featured.

Speaking on due diligence were law firm Al Dahbashi Gray partner Josh Kemp of the UAE, and law firm Souto Correa Advogados Dispute Resolution partner Raphael Jadão and Corporate partner Karina Yunan Saad.

For more on the webinar check out Due diligence is vital to deals of any size.

You can watch the full webinar here:

Translated by Gabriel Pomerancblum


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