Treasury Operations, Controls and Regulatory Compliance
Treasury operations turn executed deals into settled cash and accurate books. The exam tests confirmation and settlement discipline, reconciliation, payment controls, and the reporting obligations that keep treasury inside regulatory limits.
Core controls
Every deal is confirmed by back office with the counterparty, independently of the dealer, before settlement. Standard settlement instructions must only be changed after call-back verification to a known contact - payment-diversion fraud depends on relaxed practice. Large-value payments go through RTGS with cut-off times; settlement risk is reduced by payment-versus-payment arrangements and CLS for eligible currencies. Nostro accounts are reconciled daily and all breaks cleared within a defined ageing limit. Regulatory returns, large-exposure reporting and capital and liquidity submissions must be accurate and timely; sanctions screening and KYC are continuous obligations, not onboarding formalities.
Worked example
A nostro statement shows 84,812,300 while the ledger shows 84,806,700 - a difference of 5,600. Investigation shows bank charges of 600 not yet booked, and an incoming wire of 5,000 that the bank has credited but the ledger has not captured. Both items are identifiable and belong to the current date, so no aged break exists. The control lesson is that the 600 charge would have repeated every month had the reconciliation not been performed daily; recurring small unexplained items are a stronger fraud signal than one large one.
Traps that cost marks
Allowing front office to release payments; accepting standard settlement instruction changes by email without call-back; back-dating deal tickets to fit the reporting date; delayed clearing of sanctions false positives; ignoring cut-off times and paying penalty charges; sharing system passwords across the dealing team; treating a reconciliation difference as immaterial without identifying it.