Foreign Exchange and Trade Service Operations

Introduction

Foreign exchange and trade services connect domestic banking systems with international commerce. Banks enable customers to buy and sell foreign currencies, receive and send cross-border remittances, settle import and export transactions, and manage payment risks through documentary collections, letters of credit and guarantees. These activities generate fee income and support economic activity, but they also expose banks to foreign-exchange risk, settlement risk, documentary fraud, sanctions risk, money-laundering risk and operational errors.

A banking officer must therefore combine customer service with disciplined control. The central principle is that an international transaction should be processed only when the customer, purpose, documents, currency, amount, counterparties and settlement instructions are sufficiently understood and authorized. Procedures vary by jurisdiction and bank policy; consequently, local law, central-bank rules, sanctions requirements and the bank's approved procedures always prevail.

Learning Objectives

By the end of this chapter, the learner should be able to:

1. Explain the purpose and mechanics of foreign-exchange operations.
2. Calculate basic exchange rates, customer quotations and foreign-currency amounts.
3. Process inward and outward remittances using appropriate operational controls.
4. Distinguish documentary collections from letters of credit and guarantees.
5. Explain the roles of key trade documents and identify common discrepancies.
6. Apply principles of customer due diligence, sanctions screening, segregation of duties and record keeping.
7. Respond appropriately to operational, compliance and customer-service risks.

1. The Banking Role in International Transactions

International trade normally creates two linked requirements: a commercial requirement to move goods or services, and a financial requirement to move value. An importer may need foreign currency to pay an overseas supplier. An exporter may need assurance that payment will be received. A migrant worker may need to send funds to family members. Banks provide the infrastructure for these activities through accounts, payment networks, foreign-currency dealing, trade finance and risk controls.

The bank may act in several capacities:

• Payment intermediary: transmitting funds between the ordering customer and beneficiary.
• Foreign-exchange dealer: exchanging one currency for another at an approved rate.
• Collection agent: forwarding commercial documents and collecting payment or acceptance.
• Issuing bank: undertaking obligations under a letter of credit or guarantee on behalf of a customer.
• Advising or confirming bank: authenticating and communicating a credit, and in the case of confirmation, adding its own payment undertaking.
• Custodian and document controller: receiving, recording, safeguarding and releasing trade documents.

These roles must not be confused. A bank handling documents under a collection does not normally promise to pay merely because documents are presented. Conversely, an issuing bank's undertaking under a documentary credit is independent of the underlying sales contract, subject to the applicable rules and compliant presentation.

2. Foreign-Exchange Fundamentals

2.1 Meaning of foreign exchange

Foreign exchange, commonly abbreviated as FX or forex, is the conversion of one currency into another. An exchange rate expresses the value of one currency in terms of another. A quotation can be written as:

This means one US dollar costs 150 Japanese yen. The currency on the left is the base currency, and the currency on the right is the quote currency. Quotations must always be read carefully because reversing the currencies changes the numerical rate.

The spot rate applies to a transaction settled according to the market's normal spot settlement convention. A forward transaction fixes an exchange rate today for settlement on a future date. A swap combines a purchase and sale of currency for different value dates. At diploma level, the essential operational distinction is whether the customer requires immediate settlement or future delivery.

2.2 Bid, offer and spread

A bank normally quotes two prices:

• Bid rate: the rate at which the bank buys the base currency.
• Offer or ask rate: the rate at which the bank sells the base currency.

The offer is normally higher than the bid. The difference is the spread:

The spread is expressed in units of the quoted currency per unit of base currency. It compensates the bank for market risk, liquidity, operating costs and profit. A customer buying foreign currency from the bank receives the bank's selling or offer rate; a customer selling foreign currency to the bank receives the bank's buying or bid rate.

2.3 Direct and indirect quotations

A direct quotation states the domestic-currency value of one unit of foreign currency. For a customer in Country X, 1 USD = 150 XCU is a direct quotation if XCU is the domestic currency. An indirect quotation states the foreign-currency value of one unit of domestic currency. The two quotations are reciprocals, subject to consistent bid and offer treatment.

For a single rate, the reciprocal is:

In actual dealing, a bank must not simply reverse a bid or offer without considering the correct side of the market. Rates are also affected by value date, transaction size, customer segment, market volatility and internal pricing authority.

2.4 Worked foreign-exchange example

Assume a bank quotes EUR/USD as 1.0840–1.0850, meaning the bank buys one euro at USD 1.0840 and sells one euro at USD 1.0850.

An importer wants to buy EUR 20,000. The bank sells euros, so the offer rate applies:

If an exporter sells EUR 20,000 to the bank, the bid rate applies:

The USD 20 difference is attributable to the quoted spread, ignoring fees, taxes and other adjustments. The calculation assumes that the quotation is expressed as USD per EUR and that no minimum commission, rounding rule or regulatory charge applies.

2.5 Cross rates

A cross rate is derived when the required currency pair is not quoted directly. Suppose the bank quotes:

• EUR/USD = 1.0800
• USD/GBP = 0.7900

A simple mid-rate estimate for EUR/GBP is:

In a customer quotation, the bank must use the appropriate bid and offer combinations, not merely multiply two mid-rates. Cross-rate calculations also require attention to the direction of each quotation, transaction costs and market liquidity.

2.6 Operational controls for FX transactions

A basic FX transaction should normally include:

1. Verified customer identity and account authority.
2. Confirmation of currency, amount, purpose and value date.
3. A rate obtained from an authorized dealing or treasury system.
4. Disclosure of applicable fees, taxes and net settlement amount.
5. Screening against sanctions and other required watchlists.
6. Confirmation of source of funds where required by risk policy.
7. Independent checking of data entry and settlement instructions.
8. Proper accounting entries and retention of the transaction record.

Staff must not alter a rate, backdate a transaction, split a transaction to avoid controls or release funds on an informal instruction. Rate overrides require documented approval and an audit trail.

3. Remittance Operations

A remittance is a transfer of money from one person or organization to another, often across national borders. It may be an inward remittance received for a local beneficiary or an outward remittance sent by a local customer to an overseas beneficiary.

3.1 Parties to a remittance

Common parties include:

• Ordering customer: instructs the transfer.
• Ordering bank: accepts and sends the payment instruction.
• Correspondent bank: maintains a relationship enabling settlement in a currency or location.
• Beneficiary bank: receives the payment instruction.
• Beneficiary: final recipient of funds.
• Payment-system operator: provides messaging or settlement infrastructure.

A payment message is not the same as settlement. A message communicates an instruction, while settlement involves the actual movement or discharge of funds through accounts, clearing arrangements or correspondent balances.

3.2 Outward remittance workflow

The standard workflow is as follows:

Instruction → customer verification → purpose and source-of-funds review → sanctions screening → rate and charges → authorization → payment message → settlement monitoring → reconciliation and record retention.

The officer should verify the beneficiary's name, account number or international account identifier, bank identifier, address where required, payment purpose and currency. Errors in beneficiary details can cause rejection, delay or payment to the wrong party. A customer should be shown the relevant charges and expected amount received where the payment system permits deductions by intermediaries.

3.3 Inward remittance workflow

For an inward transfer, the bank identifies the beneficiary account, checks the payment message and applies sanctions, fraud and regulatory controls. Funds should not be credited automatically where the purpose is unclear, the beneficiary information is inconsistent, the payment is subject to a hold, or required information is missing. A permissible payment may be credited after charges, exchange conversion and regulatory reporting requirements are applied.

3.4 Charges and exchange conversion

Remittance pricing may include an initiation fee, correspondent charge, receiving fee, foreign-exchange margin and applicable tax. The customer must receive accurate information about charges and the exchange rate. A bank should avoid representing an amount as guaranteed to reach the beneficiary when intermediary deductions or local restrictions may affect the final amount.

3.5 Remittance risks

Important risks include:

• use of the service for money laundering, terrorist financing or sanctions evasion;
• social engineering and impersonation of customers or beneficiaries;
• altered beneficiary instructions;
• duplicate payments;
• incorrect account or bank identifiers;
• delayed or failed settlement;
• unauthorized staff intervention; and
• inadequate investigation of returned or suspended funds.

A callback to a previously verified customer contact is an effective control when payment instructions are changed, particularly for corporate customers. Email alone should not be treated as sufficient authority unless the bank's approved authentication process permits it.

4. Trade Documentation

Trade documents serve commercial, financial, legal, transport and regulatory purposes. Their exact requirements depend on the transaction and applicable rules, but common documents include the following.

A trade-services officer does not assume that one document proves every fact. A bill of lading may evidence shipment but does not by itself prove quality. An invoice states a price but does not independently prove delivery. Document examination is therefore limited to the responsibilities established by the product, contract and applicable rules.

5. Documentary Collections

A documentary collection is an arrangement in which the exporter entrusts documents to a bank for forwarding to a collecting bank, with instructions to release documents against payment or acceptance.

The principal forms are:

• Documents against payment (D/P): documents are released only against payment.
• Documents against acceptance (D/A): documents are released against the buyer's acceptance of a bill of exchange or other agreed undertaking to pay at a future date.

The principal parties are the drawer or exporter, drawee or importer, remitting bank, and collecting/presenting bank. Unlike a commercial letter of credit, the bank generally does not guarantee payment under a collection. The exporter retains significant commercial and buyer risk.

Collection process

1. The exporter ships goods, if appropriate, and prepares documents.
2. The exporter gives documents and collection instructions to the remitting bank.
3. The remitting bank checks instructions, records documents and dispatches them.
4. The collecting bank presents documents to the importer.
5. Under D/P, the importer pays before documents are released.
6. Under D/A, the importer accepts the payment undertaking and documents are released.
7. Funds or accepted documents are returned through the banking channel.

The collection instruction must be unambiguous. It should state the amount, currency, drawee, release conditions, charges, protest instructions where relevant, and action to take if payment or acceptance is refused. A bank must not release documents contrary to clear instructions without proper authorization.

6. Letters of Credit

A documentary letter of credit, or documentary credit, is an undertaking issued by a bank at the request of an applicant to pay a beneficiary against a presentation that complies with the credit's terms and the applicable rules. The applicant is usually the importer and the beneficiary is usually the exporter.

6.1 Fundamental principles

Independence principle: The credit is separate from the underlying sales contract. Banks deal with documents rather than goods, services or performance. A dispute about defective goods does not automatically permit the issuing bank to refuse a complying presentation.

Strict but rule-based compliance: Documents must comply with the credit and applicable international rules, commonly the Uniform Customs and Practice for Documentary Credits (UCP), where incorporated. Examination is not a guarantee of authenticity or physical condition; it is an examination within the bank's documentary responsibilities.

Issuing-bank undertaking: The issuing bank's obligation is central to the credit. An advising bank normally authenticates and advises the credit without adding a payment obligation. A confirming bank adds its own undertaking, subject to the terms of the confirmation.

6.2 Types of documentary credits

• Sight credit: payment is due when a complying presentation is determined to exist.
• Usance or deferred-payment credit: payment occurs at a specified future date.
• Confirmed credit: a second bank adds its independent undertaking.
• Revolving credit: availability renews according to stated conditions.
• Transferable credit: may be transferred when expressly designated transferable and subject to applicable rules.
• Standby letter of credit: generally supports performance or payment upon default and resembles a guarantee in commercial purpose, although its legal and documentary structure differs.

6.3 Letter-of-credit workflow

The process normally includes:

1. Applicant requests a credit and submits transaction details.
2. The issuing bank assesses creditworthiness, collateral, purpose, country risk and compliance risk.
3. The credit is issued through an authenticated banking channel.
4. The advising bank authenticates and advises the beneficiary.
5. The beneficiary ships or performs according to the credit.
6. The beneficiary presents documents within the permitted period.
7. The nominated, confirming or issuing bank examines the presentation.
8. A complying presentation is paid, accepted or deferred; a discrepant presentation is handled under approved procedures.
9. Documents are released or forwarded according to the credit and settlement arrangements.
10. The applicant reimburses or the bank applies approved financing and records the transaction.

6.4 Discrepancies

A discrepancy is a failure of a presented document or presentation to comply with the credit or applicable rules. Common examples include late shipment, late presentation, inconsistent names, incorrect quantities, missing signatures, an expired credit, an inadequate insurance document or a bill of lading with an unacceptable notation.

Discrepancies should be recorded precisely rather than described vaguely as “documents not in order.” The bank must follow the applicable rules and time limits for examination and notice. Staff should not conceal discrepancies, alter documents or promise payment before proper approval. If the applicant is willing to accept discrepancies, the bank still needs to follow its authority and risk procedures; applicant waiver does not automatically eliminate every legal, sanctions or operational concern.

6.5 Worked credit example

An import credit is issued for USD 50,000, available by sight payment, requiring shipment no later than 30 June and presentation within 21 days after shipment. Goods are shipped on 25 June, and documents are presented on 10 July. The presentation is within 21 days because 10 July is 15 days after 25 June, assuming calendar-day counting under the applicable rules. If all other requirements comply and the credit has not expired, the timing conditions are satisfied. If the documents are presented on 20 July, the presentation would be 25 days after shipment and would be late unless the credit or applicable rules provide otherwise.

7. Bank Guarantees

A bank guarantee is a contingent undertaking under which a bank promises to pay a beneficiary if the applicant fails to perform a specified obligation and the beneficiary makes a demand complying with the guarantee. Examples include bid bonds, performance guarantees, advance-payment guarantees, customs guarantees and financial guarantees.

A guarantee can expose the bank to credit risk even before payment because the bank may be required to pay on demand. Before issuance, the bank should assess the applicant's financial capacity, underlying contract, guarantee wording, amount, expiry, governing law, counter-guarantee arrangements, collateral and country risk.

Guarantee versus documentary credit

The precise legal effect depends on the wording and governing rules. Staff must never describe a guarantee as “just a formality.” A poorly drafted expiry clause, automatic-extension provision or demand requirement can create substantial exposure.

8. Compliance, Governance and Internal Control

International banking operations are regulated because they can move value rapidly across borders. Core controls include customer due diligence, beneficial-ownership identification, sanctions screening, transaction monitoring, suspicious-activity escalation, foreign-exchange reporting, record retention and protection of personal data.

Three lines of control

1. First line: front-office and operations staff identify and manage risks during onboarding and processing.
2. Second line: compliance and risk functions establish standards, review alerts and provide challenge.
3. Third line: internal audit independently evaluates the design and effectiveness of controls.

Segregation of duties

No single employee should normally control initiation, approval, settlement and reconciliation of a high-risk transaction. Dual control is particularly important for guarantees, letters of credit, rate overrides, payment releases and amendments. System access should be role-based, periodically reviewed and withdrawn promptly when duties change.

Sanctions and financial crime

Screening should cover customers, beneficiaries, banks, vessels, ports, goods and other relevant parties where required. A potential match must be investigated according to the bank's escalation process; staff should neither ignore a likely match nor disclose confidential investigation details to the customer. Transaction structuring, unexplained third-party payments, inconsistent trade values, unusual routing and pressure to bypass documentation are warning signs requiring enhanced review.

Fraud and trade-based money laundering

Trade-based money laundering may involve over-invoicing, under-invoicing, multiple invoicing, false descriptions, phantom shipments or unusual goods routes. No single indicator proves misconduct. Effective review compares invoices, transport documents, contracts, payment patterns, customer profile and plausible commercial purpose.

Ethical conduct requires accurate customer communication, confidentiality, impartial treatment and refusal to process transactions that lack required authority or documentation. Speed of service is important, but it never overrides law or control requirements.

9. Technology and Contemporary Developments

Modern banks use core-banking platforms, payment-messaging systems, trade-finance platforms, optical character recognition, automated sanctions screening and reconciliation tools. Distributed-ledger and electronic-document initiatives seek to reduce paper handling and improve traceability, but legal recognition, interoperability, cybersecurity and data governance remain important conditions.

Artificial intelligence can assist with document classification, extraction of invoice fields, anomaly detection and prioritization of alerts. It should support—not replace—professional judgment. A model may misread a document, generate a false alert or fail to recognize a novel sanctions-evasion pattern. Banks therefore need human review, explainability, access controls, testing, model monitoring and clear accountability.

Electronic bills of lading and digital trade documents can reduce courier time and fraud opportunities, but staff must confirm that the document is legally effective in the relevant jurisdictions and accepted by the parties. Automation is valuable only when the underlying process, data quality and authorization controls are sound.

10. Integrated Illustrative Case

Background

A fictional manufacturing company, Meridian Components Ltd., imports machinery valued at USD 240,000 from an overseas supplier. It asks its bank to issue a 90-day documentary credit. The company also requests an outward remittance for a separate USD 18,000 consulting payment to a beneficiary in another country.

Problem

During review, the bank finds that the credit application names one supplier, while the pro forma invoice names a related company. The proposed shipping route passes through a higher-risk jurisdiction. The consulting payment contains incomplete beneficiary-bank information and is requested urgently by email from a new address.

Analysis

The differences may have an innocent explanation, but they create customer-identification, sanctions, fraud and trade-purpose risks. The bank should not issue the credit or release the remittance merely because the customer has a good account history. It should establish the relationship between the companies, identify beneficial owners, verify the commercial contract, screen all relevant parties and assess the route and goods.

The altered email instruction is a classic payment-fraud risk. The bank should use an approved callback to a previously verified contact and obtain corrected payment details through an authenticated channel. The transaction must be screened before release.

Approach and solution

The relationship manager requests corporate documents, the underlying purchase contract, supplier ownership information and transport details. Compliance reviews the parties and route. Operations checks that the proposed credit terms are internally consistent, including shipment date, documents, expiry and presentation period. Credit officers approve the applicant's limit and any required cash margin. The remittance is held until beneficiary details are verified and screening is completed.

After review, the supplier relationship is documented, the route is approved with enhanced monitoring, and the credit is issued with clear documentary requirements. The consulting payment is processed only after authenticated confirmation and compliance clearance.

Outcome

The bank completes both transactions without bypassing controls. It records the rationale for enhanced review, retains supporting documents and schedules follow-up monitoring. The customer receives an explanation that additional checks protect both the customer and the bank.

Learning points

The case demonstrates that operational service is not merely data entry. Officers must connect documents, parties, purpose, routing and authorization. Urgency, familiarity with the customer and a plausible invoice do not remove the need for independent verification.

11. Best-Practice Checklist

Before completing an international transaction, the officer should ask:

• Is the customer properly identified and authorized?
• Is the purpose economically plausible and adequately documented?
• Are all relevant parties screened?
• Is the currency quotation correct and the correct bid or offer applied?
• Are charges, value date and expected settlement clear?
• Are beneficiary and bank details independently verified?
• Do trade documents agree in names, amounts, dates and quantities?
• Are the product rules and applicable international rules identified?
• Has a second person reviewed high-risk or high-value processing?
• Are discrepancies, exceptions and approvals recorded?
• Can the transaction be reconstructed from the audit trail?

Chapter Summary

Foreign-exchange and trade-service operations enable international commerce but expose banks to market, credit, settlement, documentary, fraud and compliance risks. Exchange rates must be read in the correct direction, with the bank's bid applying when it buys the base currency and its offer applying when it sells the base currency. Remittances require accurate instructions, authentication, sanctions screening, transparent charges and reconciliation.

Documentary collections transfer documents through banks under payment or acceptance instructions, but they generally do not create a bank payment guarantee. Documentary credits create independent bank undertakings against complying documentary presentations, while guarantees create contingent obligations triggered by demands meeting their terms. Trade documents must be examined carefully, discrepancies must be reported accurately, and no bank should confuse document examination with assurance about the physical goods.

Effective operations depend on customer due diligence, beneficial-owner identification, sanctions controls, segregation of duties, dual authorization, system access management, record retention and escalation of unusual activity. Technology and AI can improve speed and consistency, but human accountability, legal validity, data quality and governance remain essential.

Key Terms

Foreign exchange: The conversion of one currency into another.

Base currency: The first currency in an exchange-rate quotation.

Quote currency: The second currency in an exchange-rate quotation.

Bid rate: The rate at which a bank buys the base currency.

Offer rate: The rate at which a bank sells the base currency.

Spread: The difference between the offer rate and bid rate.

Spot transaction: A foreign-exchange transaction settled according to the normal spot convention.

Forward transaction: An exchange agreement for settlement on a future date.

Remittance: A transfer of money from an ordering party to a beneficiary.

Correspondent bank: A bank that provides payment or banking services for another bank.

Documentary collection: A bank-mediated presentation of trade documents against payment or acceptance.

Documents against payment: Collection terms requiring payment before document release.

Documents against acceptance: Collection terms requiring acceptance of a future payment obligation before document release.

Documentary credit: A bank undertaking to pay against a complying documentary presentation.

Issuing bank: The bank that issues a documentary credit at the applicant's request.

Advising bank: The bank that authenticates and communicates a credit to the beneficiary.

Discrepancy: A failure of documents or presentation to comply with required terms.

Bank guarantee: A bank undertaking to pay a beneficiary when specified demand conditions are met.

Beneficial owner: The natural person who ultimately owns or controls a customer or transaction.

Trade-based money laundering: Use of trade transactions to disguise or transfer illicit value.

Review Questions

Short Answer Questions

1. What is the difference between a bid rate and an offer rate?
2. Identify four parties that may be involved in an international remittance.
3. What is the difference between documents against payment and documents against acceptance?
4. State the independence principle of a documentary credit.
5. List four controls relevant to foreign-exchange or trade-service operations.

Long Answer Questions

1. Explain the complete workflow for an outward international remittance and discuss the principal risks at each stage.
2. Compare documentary collections, documentary credits and bank guarantees in terms of purpose, bank obligation and customer risk.
3. Discuss the importance of trade documents and explain why banks examine documents rather than the physical goods.
4. Explain how segregation of duties, dual control and audit trails reduce operational and fraud risk.
5. Evaluate the benefits and limitations of using AI and electronic documents in trade-service operations.

Analytical / Application Questions

1. A bank quotes EUR/USD at 1.0840–1.0850. A customer wants to buy EUR 35,000. Determine which rate applies and calculate the USD amount before charges. Explain your reasoning.
2. An importer asks a bank to release collection documents before payment because the goods are urgently needed. What risks arise, and what controls and authorities should the bank consider?
3. A letter-of-credit presentation contains a shipment date within the permitted period but inconsistent names on the invoice and bill of lading. Analyze how the bank should respond and distinguish documentary examination from assessment of the goods themselves.

Multiple Choice Questions with Answers

Question 1

A bank quotes EUR/USD at 1.0840–1.0850. Which rate normally applies when a customer buys euros from the bank?

A. 1.0840 bid rate

B. 1.0850 offer rate

C. The average of the two rates

D. The reciprocal of 1.0840

Correct Answer: B. 1.0850 offer rate

Question 2

Using the quotation EUR/USD 1.0840–1.0850, how many US dollars are required to buy EUR 10,000 before charges?

A. USD 10,850

B. USD 10,840

C. USD 9,216.59

D. USD 108,500

Correct Answer: A. USD 10,850

Question 3

Under documents against payment collection terms, when are documents normally released to the importer?

A. When the importer accepts a future payment obligation

B. When the importer makes payment

C. When the exporter confirms shipment by email

D. When the issuing bank guarantees the goods

Correct Answer: B. When the importer makes payment

Question 4

Which principle means that a documentary credit is separate from the underlying sales contract?

A. Settlement finality principle

B. Indemnity principle

C. Independence principle

D. Reciprocity principle

Correct Answer: C. Independence principle

Question 5

What is the normal role of an advising bank that has not confirmed a documentary credit?

A. To guarantee the applicant's payment personally

B. To authenticate and communicate the credit

C. To inspect the physical goods before shipment

D. To insure the shipment automatically

Correct Answer: B. To authenticate and communicate the credit

Question 6

Which item is most clearly a documentary discrepancy?

A. The goods are manufactured by a well-known company

B. The presentation is made after the credit's permitted presentation period

C. The applicant has a long relationship with the bank

D. The importer dislikes the goods' color

Correct Answer: B. The presentation is made after the credit's permitted presentation period

Question 7

What is a principal characteristic of a bank guarantee?

A. It always requires payment immediately when issued

B. It is a contingent undertaking subject to its stated demand conditions

C. It is identical to a spot foreign-exchange transaction

D. It guarantees the physical quality of every shipment

Correct Answer: B. It is a contingent undertaking subject to its stated demand conditions

Question 8

Which control is most appropriate when a corporate customer emails changed beneficiary details from a new address?

A. Process the payment immediately because the request is urgent

B. Ignore the change and use any previous beneficiary details

C. Verify the change through an approved independent callback or authentication process

D. Ask an unrelated customer to confirm the details

Correct Answer: C. Verify the change through an approved independent callback or authentication process

Question 9

Which activity is an example of trade-based money laundering risk?

A. A documented payment matching a verified invoice and shipment

B. Over-invoicing goods to transfer additional value across borders

C. A properly authorized currency conversion

D. A reconciliation of correspondent-bank balances

Correct Answer: B. Over-invoicing goods to transfer additional value across borders

Question 10

What is the main purpose of segregation of duties in trade-service operations?

A. To allow one employee to complete every stage quickly

B. To prevent any employee from accessing banking systems

C. To separate initiation, approval, settlement and checking responsibilities

D. To eliminate the need for customer identification

Correct Answer: C. To separate initiation, approval, settlement and checking responsibilities