Risk Management and Compliance

Risk Management

Documents play a major role in international commodity trade - indeed, standard payment procedures (“documentary credit”) rely on them. Nevertheless, in practice, a very large part of commodity transactions result in documents which do not conform to the specifications in Letters of Credit, or are different from those required by the buyer. This causes risks for both buyers and sellers (including the risk of refusal of the cargo, and the risk of non-payment) and can be quite expensive.

Alchemie Energy is itself guided by and recommends to its Associates, agents, intermediaries, buyers and sellers to follow the recommendations made by the United Nations Conference On Trade And Development (UNCTD) in its document titled “Documentary Risk In Commodity Trade”.

With the large sums of money involved it is paramount to ensure the integrity and legality of the business process. In order to achieve compliance and to conform with “Best Practice” Alchemie Energy undertakes a formal, documented due diligence process.

Legislation & Best Practice Compliance

Terrorist attacks, accelerating globalization, a wave of corporate scandals, and the dramatic growth in Business-to-business transactions have led to a steep rise in the number of laws that require businesses to comply with. These laws on tax, labour, environment, corporate governance, money laundering, data privacy, consumer protection, supply chain traceability and e-contracting all require different safeguards using different terminology. With the added dimension of dissimilar approaches in regional, national, provincial and state laws, an extremely complex “compliance matrix” emerges that companies find increasingly difficult to manage. Most companies do not have the resources to monitor, analyze and maintain compliance with all these different requirements and the ramp-up in the number and complexity of compliance rules is making it increasingly difficult and expensive for business to operate – especially for businesses operating globally. One single set of business information may be subject to tax, environmental, privacy and anti-money laundering rules – yet there is a limit to the number of different safeguards a company can apply to the same information. In some extreme cases, legal requirements conflict, leaving businesses with the impossible choice to decide which law to abide by. It is essential that all parties that AE does business with are aware of the legislative burden, implement Best Practice were possible and take legal advice where appropriate.

In order to comply with the strict international laws established to fight organised crime, drug dealing and terrorism Alchemie Energy’s business processes are based on the International Chamber of Commerce Code of Best Practice and the Financial Action Task Force (FATF) 40 Recommendations and 9 Special Recommendations (that applies to all countries which belong to FATF or one of the regional equivalents - which is most of the countries in the world.) to ensure that it is compliant with current legislation and industry best practice although the trade in hydrocarbons are not covered under specific designated non-financial businesses and professions. Due care is taken to ensure the Commodity is not destined for an embargoed destination as defined by the UN or other authority where Alchemie Energy’s intermediaries are domiciled.

Under know your business partners codes of practice Alchemie Energy (may) request individual names, title, organization name, copies of passports and company registration documentation, legal contact addresses, preferred contact information such as postal address, telephone or facsimile number, e-mail address, or internet site URLs In addition to the above information for the companies record-keeping requirements details of correspondence, contracts, documentation and banking records will be kept for a five year period after the date of business finishing with the other party.

Contracts between Alchemie Energy and its agents, intermediaries, investors, traders, buyers and sellers contain an undertaking from the parties that they are aware of the relevant national and international legislation that they are bound by law and best practice to comply with and that they have taken appropriate due diligence checks themselves to ensure that they, or any parties with whom they are dealing are not involved in money laundering, tax evasion or passing of bribes.