NEW YORK—JPMorgan Chase has launched a platform to digitize and automate cross-border payments in China, while separately it has been hit with a fine by Ireland’s regulator.
In China, the bank’s new e-customs payment solution, which recently went live, aims to streamline the process of making cross-border payments from China. As a result of the country’s currency controls, importers are required to provide supporting documents – usually physical, paper-based ones – to their banks prior to making payments to overseas suppliers, Global Trade Review explained.
“With the new platform, importers can simply input their payment instructions, together with the associated customs declaration form number. Using an API, the application will then retrieve the relevant customs declaration status in detail from the local authorities via the Shanghai international trade single window in real time, and then process the payments automatically,” Global Trade Review said.
“We are pleased to roll out an innovative solution that enables the full digitization of cross-border payments, which we view as a milestone and one that addresses our clients’ specific needs amid a rapidly-evolving treasury landscape,” says Rani Gu, head of treasury services, China and head of treasury services product, Greater China at JP Morgan.
First Bank in China
“JP Morgan says that it is the first foreign bank in China to offer such a service. Although the bank has been actively exploring how emerging technologies such as blockchain can make cross-border payments faster and more secure, a spokesperson tells GTR that this new solution does not rely on that technology, nor will it use JPM Coin, a digital coin designed by the bank earlier this year to make instantaneous payments using blockchain technology,” Global Trade Review said.
Payments via the platform can be made to suppliers in any country, and the solution is targeted at all legal entities incorporated in China who import goods from overseas, Global Trade Review said.
Fine in Ireland
Separately, the Central Bank of Ireland has imposed a €1.6m fine on JPMorgan for “serious” regulatory failings in its Dublin fund administration arm.
The fine on a division of the U.S. banking giant called JPMorgan Administration Services (Ireland) follows an investigation into fund administration outsourcing, Financial Times reported.
“[The] failures in this case demonstrated unacceptable weaknesses in its outsourcing framework,” said Seána Cunningham, central bank director of enforcement and anti-money laundering. “These weaknesses were further evidenced by the firm’s repeated failures to satisfactorily remediate the issues identified by the central bank as part of its supervisory engagement with the firm. The fine imposed reflects [the firm’s] failure to address the root causes of these weaknesses over several years.”
A JPMorgan spokesman told Financial Times the U.S. bank “co-operated fully” with the central bank and has made “remedial adjustments” to controls procedures in the Irish entity. “At no point were our clients or the quality of the service we provide to them affected, and we continue to operate our fund administration business normally,” the spokesman said.
Admission to 4 Breaches
The JPMorgan subsidiary admitted four regulatory breaches between July 2013 and June 2016, the central bank said in a statement. The “appropriate fine” was €2.29m but the central bank reduced the penalty by 30% in line with a settlement discount scheme. The firm failed to obtain prior central bank approval to outsource fund administration and failed to have “adequate control systems” to ensure central bank requirements were then met. “As a result of these failings, [JPMorgan Administration Services (Ireland)] did not always have a clear understanding of, and controls around, its outsourcing arrangements,” the central bank said, according to the Financial Times report.
“This undermined the ability of the firm to effectively identify and manage the risks associated with its outsourcing arrangements. In addition, the firm’s failings undermined the central bank’s ability to properly assess, monitor and supervise [the firm’s] outsourcing of regulated activities,” the central bank stated.