1.

1The nature of the foreign currency transaction is clarified with the customer
The foreign exchange market is the place where money denominated in one currency is bought and sold with
money denominated in another currency. It provides the physical and institutional structure through which the
currency of one country is exchanged for that of another country, the rate of exchange between currencies is
determined, and foreign exchange transactions are physically completed.

The primary purpose of this market is to permit transfer of purchasing power denominated in one currency to
another. For example, a Japanese exporter sells automobiles to a U.S. dealer for dollars, and a U.S.
manufacturer sells instruments to a Japanese Company for yen. The U.S. Company will like to receive payment
in dollar, while the Japanese exporter will want yen.

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It would be inconvenient for individual buyers and sellers of foreign exchange to seek out one another. So a
foreign exchange market has developed to act as an intermediary. It is the largest financial market in the world
with prices moving and currencies trading somewhere every hour of every business day.

Major world trading starts each morning in Sydney and Tokyo; moves West to Hong Kong and Singapore;
passes on to Bahrain; shifts to the main European markets of Frankfurt, Zurich and London; Jumps the
Atlantic to New York; goes west to Chicago, and ends in San Francisco and Los Angeles.

It is the largest financial market in the world having daily turnover of over 1600 billions dollar in 2001. Bulk of
the trading is accounted for by a small number of currencies the U.S. dollar, Deutschemark (DM), Yen, Pound
Sterling, Swiss Franc, and Canadian dollar.

Foreign exchange market is of two types, viz.; retail market and wholesale market, also termed as the inter-
bank market. In retail market, travellers and tourists exchange one currency for another. The total turnover in
this market is very small.

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Wholesale market comprises of large commercial banks, foreign exchange brokers in the inter-bank market,
commercial customers, primarily MNCs and Central banks which intervene in the market from time to time to
smooth exchange rate fluctuations or to maintain target exchange rates.

Over 90% of the total volume of the transactions is represented by inter-bank transactions and the remaining
10% by transactions between banks and their non-bank customers. It is worth noting that central bank
intervention involving buying or selling in the market is often indistinguishable from the foreign exchange
dealings of commercial banks or of other participants.

The foreign exchange is similar to the over-the counter market in securities. It has no centralized physical
 1.2Relevant information is obtained from the customer including verifying the identity
of the person presenting notes for sale or wishing to purchase foreign currency
according to organizational policy and procedures

Transaction Verification

It is essential to limit inaccurate claims in FSC-certified supply chains. This is especially

true for high-risk supply chains. Transaction verification is the verification process
required by the FSC chain of custody standard to ensure that FSC output claims made
by certificate holders are accurate and match the FSC input claims of their trading
partners.

FSC Denmark / Bablu Singh

 Comparing and verifying 

 Process 

 FAQs 

 Updates 

 Documents 

Comparing and verifying

Transaction verification is a process of comparing and then verifying all transactions within a
specific product type, group or region over a given time period.

Certification bodies will be notified when transaction verification is necessary. Certificate

holders will also be informed, and will cooperate with their certification body to provide the
required data. The standard stipulates as follows:
1.7: The organization shall support transaction verification conducted by its certification body
and Accreditation Services International (ASI), by providing samples of FSC transaction data as
requested by the certification body.

The intention of this criterion is to ensure that FSC systematically investigates high-risk product
types, species and regions, and limits the amount of inaccurate transactions. All FSC chain of
custody certificate holders are subject to transaction verification. Only relevant data taken from
invoices will be collected and no financial information will be required.
Process

Steps 8 to 10 may be repeated several times for supply chains deemed high-risk.
STEP

01

Identification of potential risk

Consistent rumours or indications of high risk in a supply chain

 
STEP

02

Verification of risk

Investigation by ASI to verify level of risk. Spot-audits are part of verification.

 STEP

03

Risk evaluation report sent to FSC

ASI sends evaluation of risk level to FSC with recommendation of further action.
STEP

04

Recommendation by supply chain integrity experts to FSC Supply Chain Integrity Steering
Committee

FSC's Supply Chain Integrity Team recommends further action to the Steering Committee on the
basis of ASI investigation.
STEP

05

Decision to implement transaction verification

Decision by the FSC Supply Chain Integrity Steering Committee to implement transaction
verification in the supply chain. 
STEP

06

Notification to all certification bodies

All certification bodies are notified by ASI about upcoming transaction verification request,
including timeline and affected certificates.

 
STEP

07

Information to affected certificate holders

Affected certificate holders are notified by their certification body.

STEP

08
Call for transaction verification data

Affected certificate holders are requested to provide transaction verification data for a specified
period of time.
STEP

09

Transaction data is analysed 

Transaction data is forwarded by certification body to ASI who analyse and verify. Mismatching
claims are investigated further.
STEP

10

Action taken on mismatches

In case of evidence of fraudulent actions by certificate holders, action is taken by FSC Legal
unit, FSC Supply Chain Integrity and ASI.
FAQs

1.3 Customer requests for foreign currency dealings are handled in accordance within
the officer's authority to approve transactions

Dealing with foreign currency can be a head-scratcher. Don’t get burned changing your
money from one currency to another.

Here are our tips to avoid losing money when changing money in foreign currency
exchange transactions:

1. Exchange some cash before arriving in your next country

Sometimes exchange rates are more favorable outside of the country whose currency
you’re looking for. Even if they’re not, it’s best to get some cash before arrival just in
case your debit card doesn’t work or gets stolen.

2. Order foreign cash at home

Use Oanda (US only) or Travelex.

3. Avoid exchanging currency at airports or near tourist sites

The most convenient exchange outlets have the least favorable rates – walk a little
further and save yourself money.

4. Use ATM machines to get the best exchange rate available

If you’re arriving without local money, get yours from an airport ATM or bank, not the
currency exchange. You’ll get 2 – 5% better rates with the ATM.

5. Use credit cards for bigger purchases

You can save even more by using your no-fee credit card when paying for hotels, car
rentals and other large purchases. Just remember in many parts of the world, cash is still
king and vendors won’t accept credit cards for smaller transactions.

6. Take the time to shop around

Read the posted exchange rates and ask for the rate after commissions – rates vary
based on a per-item or per-transaction basis, or on a percentage basis. To lure you in,
some exchange kiosks will post their “sell rate” for US dollars rather than the “buy rate”
(which is what you want if you’re changing US dollars into foreign currency) and they
can differ dramatically. Another popular tactic is to list a great rate that’s only available
for large quantities of money (ie, thousands of dollars). Avoid the issue entirely by only
changing money in bigger banks and post offices

7. Get rid of all your cash before you leave the country

With the notable exception of European Union countries, getting rid of your cash before
you leave is best. Changing it when you get to the new country won’t mean favorable
rates, and most currency offices won’t exchange coins. If you don’t want to stock up at
the duty-free you can donate it to UNICEF’s Change for Good program and other
charities in many airports.
How to Find an ATM

Take a look and see if your ATM card is part of the PLUS or Cirrus networks. If so, you
can use it to get cash in hundreds of countries worldwide. Each one of these networks
have over a million ATMs around the world.The PLUS network is associated with Visa
and Cirrus with MasterCard so your Visa and Mastercards will typically work at those
ATMs respectively.
Find out beforehand if Cirrus or PLUS networks are going to be available in the
countries you’re going. Usually they will be but it wouldn’t hurt to take a look. Here are
their ATM locators: