ICC's annual Global Survey reveals that counter-terrorism and other international regulations are significantly inhibiting the ability of SMEs to trade internationally

May 30, 2018

Press release: London 30th May 2018

The International Chamber of Commerce’s 10th annual Global Survey – this year entitled Global Trade: Securing Future Growth – reveals that counter-terrorism and other international regulations are significantly inhibiting the ability of SMEs to trade internationally

According to the latest ICC Global Survey – of 251 banks in 91 countries – trade finance remains constrained, with a key reason for the constraints being lenders’ requirements to comply with international regulations. Of particular concern are regulations countering the financing of terrorism (CFT) as well as international sanctions stipulations. Some 87% of the respondents reported that complying with counter-terrorism and international sanctions regulations is a “major challenge” with respect to their ability to offer trade finance. And that this is especially harmful for small and medium-sized enterprises (SMEs).

The constraints arise from the huge increase in resources banks must invest to ensure compliance with a wide range of often inconsistent regulatory requirements and expectations across jurisdictions. Perhaps more challenging, the interpretation of regulatory requirements can vary between senior policymakers and examiners assessing compliance. The effect is that banks apply large internal resources and incur cost to ensure compliance with standards that are at times unintended and unnecessarily stringent – a burden banks increasingly consider only worthwhile for their largest clients, leaving SMEs unsupported.

“Everyone accepts that access to finance is critical for business growth, particularly for SMEs,” says Chris Southworth, ICC United Kingdom’s Secretary General. “Yet here we see an example of well-meaning regulation having unintended consequences in the real economy. So while innovation and digital trade continue to support financial inclusion for SMEs by providing new ways of delivering finance to business, a more proportionate regulatory regime for the treatment of low risk trade finance would unlock more resource to fund trade, which will benefit the global economy.”

Writing in Global Survey, World Trade Organization Director General, Roberto Azevêdo, added his concern regarding financial inclusion for SMEs. Including micro companies (with less than 10 employees), he said: “Around half of MSME requests for trade finance are rejected by banks, and in more than 70% of the cases they seek no alternative financing, simply because it is not available. Persistent gaps in trade finance can mean exclusion from the trading system and that major trade and development opportunities are missed”.

The Global Survey concludes that SME exclusion is a major cause of the “trade finance gap” (calculated by the ICC and Asian Development Bank at US$1.5 trillion in 2017) between the demand and supply of trade finance. 

“This year’s Global Survey consistently shows that regulatory issues are among respondents’ top concerns,” wrote John Denton, General Secretary of ICC in the survey’s foreword. “Looking at further research from ICC and other actors, it is also clear that some financial regulations governing banks have had the unintended consequence of widening the trade finance gap, making it more difficult for smaller companies and traders in the developing world to access much needed financing.”

However, the Global Survey findings also reveal strong positivity among trade-supporting lenders with respect to trade finance growth trends. Nearly three quarters of banks presented an optimistic outlook for the next 12 months, with respondents headquartered in Africa and Asia Pacific the most positive, at 89% and 81% respectively.

The full report can be downloaded here.


Chelsy Shipman
Press & Communications | ICC United Kingdom
+ 44 (0) 20 7377 4992 / press@iccwbo.org
www.iccwbo.uk / @iccwboUK

Leave a comment

Comments will be approved before showing up.

Also in Press releases

ICC Incoterms® 2020: The rules are changing

July 31, 2019

Using the wrong ICC Incoterm when trading goods worldwide exposes companies to greater risk and cost in the form of lost goods or unnecessary disputes. This is why it is so important to understand ICC Incoterms® rules and use them correctly, so that companies can trade with one another safe in the knowledge they are following international best practice. Simple mistakes can be easily avoided if ICC’s unique international expertise and resources are made accessible to, and utilised effectively by, businesses.

Read full article →

Handing over to the next generation: John Beechey CBE steps down as Chair of ICC’s Arbitration programme and hands over leadership to Ania Farren, Managing Director at Vannin Capital.

June 24, 2019

John Beechey, one of the biggest names in international arbitration and former President of the ICC International Court of Arbitration, is retiring from his position as Chair of the International Chamber of Commerce's (ICC's) Arbitration programme in the UK, passing the torch on to his successor, Ania Farren, Managing Director of Vannin Capital. Ania will take up the reins, supported by Iain Quirk from Essex Court Chambers and Guy Pendell from CMS, whom we welcome as a new Vice Chair in the UK leadership team.

Read full article →

ICC United Kingdom partners with The London Institute of Banking & Finance to promote trade finance

February 27, 2019

London, 19 February 2019

ICC United Kingdom and The London Institute of Banking & Finance are pleased to announce their exclusive partnership for 2019, with the aim of endorsing skills pathways in trade finance education. Promoting specific trade finance skills is becoming increasingly important in protecting the future of trade finance, as more focus is needed to enhance the workforce that will ultimately be involved in the move towards paperless trade – a critical transformation period.

Read full article →