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Navigate Compliance Complexity to Achieve Global Business Success

By Karen L. Bannon

Money MazeToday’s payroll landscape is rapidly evolving. As companies continue to expand abroad to benefit from increased market presence, a global reputation, and, in some cases, more competitive salary rates, the complexity of the payments process is amplified. From language barriers to foreign exchange to differing compliance legislation, payroll officers must now navigate a significant number of factors every time they make an international payment. This often results in costly errors, delays, or, worse still, the return of funds. The impact on employees who do not receive the salaries they rely on to provide for their families and to cover costs of living is severe and ultimately leads to reduced trust between the employer and its valued staff.

It is thus critical to the success of your company’s global expansion that you take a proactive stance when handling compliance for international payments. Transparency is the key. Financial institutions need clarity and completeness in the payments they process to ensure they avoid inadvertent involvement with black-listed organizations, money launderers, and other nefarious individuals. Alongside other details, they need to be able to identify who the actual payer is and what the individual is being paid for in advance of transmitting funds. By capturing all of this payment information upfront, financial institutions will be able to review and approve your transfer more quickly without the need for time-consuming clarification or questions around your payment.

A good global payments provider can help ease this complex compliance burden. But with the number of options available, selecting the right one is not always straightforward. Consider these three characteristics to help you select the right partner:

1. Qualified and Localized Expertise to Get the Job Done

The diversity in global payroll compliance legislation is endless. Each country has its own complex maze of regulatory requirements to navigate before a payment can be made. For example, a payment to Chile in Chilean pesos requires the beneficiary’s RUT (taxpayer identification) number, and a payment over 500 million rupiah into Indonesia requires an invoice, tax bill, or other official document to support the purpose of the payment. In most countries, if just one piece of jurisdiction-specific information is omitted, the money will not be credited to the recipient’s account, leading to significant delays and overhead costs on investigations. Unfortunately, this complexity has only been compounded in recent years due to the heightened threat of global terrorism. Financial institutions around the world face pressure today to tighten their monitoring rules and increase their due diligence to prevent the transfer of funds by and to criminals.

The right payments provider will have qualified anti-money-laundering specialists with the requisite certifications and localized compliance support available to keep track of all the changes occurring in the financial services world. After all, a major regulatory headline in Australia may not have the same importance to Canada’s media. Having a local expert monitoring Australia’s news and policy activities will ensure that when the time comes to make a payment, you won’t be caught off guard.

2. The International Reach and Resources to Accelerate Payment

Having the localized experts and anti-money-laundering specialists will all be for nought if your payments provider doesn’t have the banking network in place to facilitate your international payroll. Making a cross-border payment is not as easy as just transferring money from one bank to another. To get these critical funds to your employee across the world, it must travel through a network of financial institutions.

It is therefore crucial that your chosen payments provider has the relationships and expert compliance support in place to access your target countries. Your payment may potentially need to be routed through numerous banks, especially when its destination is a remote location. As a result, your provider will need to have strong partnerships in place with institutions all over the globe and a comprehensive understanding of each one’s regulatory rules. If required information is not provided up front for each compliance link in the chain, your payment will need to be traced back through each institution, substantially delaying the process.

3. The Global Footprint to Access Emerging Markets

Emerging markets are among the fastest growing economies today, making them a lucrative investment as they continue to evolve. Yet penetrating these markets also presents numerous compliance and foreign exchange challenges. Organizations that need to make payments in exotic currencies often have limited knowledge of exchange rates, beneficiary deductions, and, most importantly, regulatory requirements.

A robust payments provider will have a specialized team dedicated to developing secure partnerships with reputable financial institutions in these regions. Delivering key international payments services, such as currency liquidity, in-country delivery and knowledge of local regulatory rules, they should ensure a streamlined cross-border payroll process so you can effectively leverage your investments in each emerging market.

Ultimately, a strong global network and familiarity with international rules and regulations will lead to a smooth payments process. While developing these internally is often easier said than done, partnering with a global payments provider, capable of delivering localized expertise and international reach, will go a long way to helping you realize the compliance efficiencies you need.