Part II Chapter 7 Flashcards
account analysis
Largely unique to the US banking system, this is a
record of the services provided to the customers of
a bank, along with detailed information on balances
and credits earned for those balances.
account resolution
Usually made at the board of director’s level,
this is the basic account or service authorization
empowering a representative of the business to
enter into agreements for financial services. It
usually specifies the functions that can be performed
by specific individuals or job titles, the persons
authorized to open and close accounts, and the
entire scope and limitations of the relationship.
blocked currencies
A type of political risk, this is the practice of a
government not allowing the conversion from the
local currency into a major trading currency.
board/corporate resolution
A document usually approved by an enterprise’s
board of directors that gives a specific individual (or
individuals) the authority to facilitate the business of
the enterprise.
certificate of incumbency
A document (signed by an enterprise’s corporate
secretary) confirming the authority of a corporate
officer to perform certain actions on behalf of the
enterprise.
counterparty risk
The risk that the other party in a contract or financial
transaction will not perform as promised.
current account
A bank depository account that is both a store of
value (deposits) and, perhaps more importantly for
treasury management purposes, a vehicle through
which an account holder uses a bank to transfer
funds to, and receive deposits from, a third party
customer identification program (CIP)
The processes used by a financial institution to verify
and validate the stated identity of a customer.
earnings credit allowance
The total dollar value of imputed interest that can
be used by a company to offset the bank service
charges incurred during the account analysis period.
excess balance
A situation that occurs in an account when its
average collected balance is greater than either
the amount that the financial institution requires as
a compensating balance or the target level that a
company has chosen to maintain.
expropriation
A government takeover of property, with or without
compensation.
forced reinvestment
A type of political risk in which funds cannot be
transferred out of a country in any form, or the
amount that can be transferred is limited
Foreign Corrupt Practices Act (FCPA)
US legislation that specifically prohibits payments
to foreign officials or their family members for
the purpose of gaining any improper business
advantage.
International Bank Account Number (IBAN)
An international standard for identifying bank
accounts across national borders.
know your customer (KYC)
The due diligence procedures that a financial
institution must follow to determine or verify the
identity of its customers.
money market deposit account (MMDA)
A type of demand deposit account that pays an
unregulated rate of interest determined by individual
institutions.
naturalization
A government takeover of a company.
nonresident account
An account with a global financial institution that is
owned by a nonresident of the country in which the
global financial institution is chartered.
request for information (RFI)
A document requesting information about a
vendor’s interest in providing, and ability to provide,
services. The requesting company provides a formal
description of its needs and asks selected vendors
to provide general information as to how they could
meet the company’s needs.
request for proposal (RFP)
A formal document prepared by a sourcing
company that outlines objectives, needs, and service
requirements and may be used to obtain bids for
anything ranging from one specific service to a
company’s entire relationship.
request for quotation/quote (RFQ)
A document whose purpose is to invite suppliers into
a bidding process on specific products or services.
required majority ownership
A type of political risk in which a government
requires that companies must be owned by resident
nationals.
scorecard
A management tool used to measure a service
provider’s performance in both a qualitative and
quantitative method.
service agreement
A legal document (contract) that describes the
requirements and expectations of both the purchaser
and provider of a specific service or services.
service level agreement (SLA)
An agreement that specifies the level of service
expected from a financial service provider, along with
a description of any penalties for failure to comply
with the requirements of the agreement.
sovereign risk
The risk that a government may default on its debt.
statement of beneficial interest
A document that specifies who has control over
funds or accounts.
time deposit account (TDA)
A depository account that must be maintained at
a financial institution for a contractually specified
period of time.
value dating
A process whereby a bank sets a forward value date
on which the value of funds credited to an account
is determined, and establishes a back value date on
which the value of funds debited from or credited to
an account is determined.
virtual bank accounts
A set of internal ledgers with only the header
account being a real account.
