arc 2014 swift compliance
DESCRIPTION
Find out how SWIFT's Compliance Portfolio can help youTRANSCRIPT
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Compliance
Marrakech, June 2014
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Compliance
• Sanctions Screening
• SWIFT KYC Registry
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A quick and easy route to comply
with sanctions regulations
Sanctions Screening
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Sanctions Fines
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Context
• Regulatory scrutiny and enforcement
of sanctions policies is increasing
• Available screening solutions complex
and costly to maintain
• Challenges for low-volume financial
institutions
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SWIFT offers a centralised
Sanctions Screening service
for low volume clients
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Your institution
Sanctions Screening over SWIFT
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Your correspondents
• Screening engine & user interface
• Centrally hosted and operated by SWIFT
• No local software installation & integration
• Real-time
• Sanctions list update service
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Public, Private & Good Guys Lists
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Public Lists
29 Public Sanctions
lists supported
Private List
Good Guys List
• AU – Australia Department of Foreign Affairs and Trade
• AU - DFAT Countries Embargoes
• AU - DFAT Iran Specified Entities List
• CA – Canada Foreign Affairs and International Trade
• CA - FAIT Countries Embargoes
• CA - Office of the Superintendent of Financial Institutions
• CA - OSFI - United Nations Act Sanctions
• CN - People's Republic of China - Ministry of Public Security
• EU - EUROPE Countries Embargoes
• EU - European Official Journal
• FR - Journal Officiel français
• HK - Hong Kong Monetary Authority
• HK - HKMA Countries Embargoes
• JP - Ministry of Finance
• NL - Frozen Assets List - Dutch Government
• NZ - New Zealand Police
• SG - Singapore MAS - Investor Alert List
• CH - Switzerland Secrétariat d’Etat à l’Economie
• CH - SECO Countries Embargoes
• UK - Her Majestys Treasury
• UK - HMT Countries Embargoes
• UN - United Nations
• UN - UN Countries Embargoes
• US - Office of Foreign Assets Control SDN list
• US - OFAC Palestinian Legislative Council
• US - OFAC Part 561 list
• US - OFAC Foreign Sanctions Evaders
• US - Financial Crimes Enforcement Network
• US - OFAC Countries Embargoes
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Settings
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Transaction Type (Domestic/International)
Message Categories
(1, 2, 4, 7)
Public Lists
Message Types
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Screening engine Sanctions Portal
SWIFT Network
FINcopy
Transaction is
copied
Decision to deliver (no hit / false positive)
or abort transaction (true hit)
Transaction abort notification (true hit)
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5
Service
user
Sending institution
Managed by SWIFT
Service overview – as a sender
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Outgoing transaction
1
3
2 4
Transaction is delivered
as-is (no hit or false positive)
Receiving
institution
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Service overview – as a receiver
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Service
user
Transaction is
copied
Transaction is delivered
as-is (no hit or false positive)
Instruction to deliver
transaction
Transaction is delivered
flagged (true hit)
2 4
Outgoing transaction
1
Sending institution
1
1
Receiving
institution
Screening engine Sanctions Portal
Managed by SWIFT
SWIFT Network
FINcopy
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Screening Report
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Audit Report
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• Easy to implement
• Simple to use
• Cost efficient
• Compliance
• Peace of mind
Benefits
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4 June 2014
193 Clients
83 Countries
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Sanctions Screening
Demo
Demo
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notification
Your institution
Messages resulting in alerts
are temporarily held in the
filter and notified to the
bank for investigation
Your correspondents
The Level 1 user logs-in to the
Sanctions portal to review the
alerts
L1 user
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Your institution
Your correspondents
The Level 1 user selects one
of the pending alerts to view
the details
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Your institution
Your correspondents
Message content
Hits generated by
the message &
sanctions list
identifier
Sanctions list
record detail
Escalate to
Level 2
L2 user
Release the
message
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Your institution
Your correspondents L2 user
Abort or Flag
the message Release the
message
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Your institution
Your correspondents L2 user
abort notif.
When the user confirms a true hit on an outgoing message:
• The original message is aborted
• An abort notification (MT019) is sent to the user
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Your institution
Your correspondents L2 user
When the user confirms a true hit on an incoming message:
• The original message is flagged…
• …then delivered to the recipient that routes it to a special queue
for appropriate processing
special queue
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• Screening of other Message formats –
non FIN (e.g. SEPA)
• Screening of additional FIN Messages
Categories (e.g. Cat 3, 5 & 9)
• Screening messages sent through SWIFT
or non-SWIFT channels
• Screening of messages before sent to
SWIFT or non-SWIFT channels
Sanctions Screening: FIN - SAF
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Interface
Alliance
Access
Connector
for
Sanctions
Back Office
Sanctions
Screening
FIN Interface
Different channels: FIN - SAF
Back Office
SWIFT
/other network
Current FIN channel
SAF (Screening of Any Format) New
SWIFT
Transaction to be screened
“Good” transaction
“Rejected” transaction
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Q&A
?
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SWIFT KYC Registry
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The context An unprecedented challenge to comply with KYC legal requirements
Information is unavailable
or of poor quality
Complex, inconsistent
requirements across
jurisdictions
Cumbersome, repetitive
and inefficient bilateral
exchanges
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The solution A web-based central platform to collect, store and access KYC information
7,000+ banks on SWIFT
Trusted third party (member-owned)
Leverage SWIFT membership
process to collect ‘basic’ data
Part of SWIFT Compliance
Roadmap (industry-driven)
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Collection of data and documents
• Structured data
• Supporting documents
• Maintenance
• Archiving and versioning
The principles A single source of correspondent banking KYC information
Controls and validation
• Completeness
• Validity
• Accuracy
Value added services
• SWIFT Profile:
standard report based on traffic data and owned by the reporting institution
Reporting and monitoring
• Platform activity
reporting and practices
• Audit trail
• Notifications
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SWIFT KYC Registry – Content Structure
Entity summary
I. Identification of the Customer
II. Ownership and Management Structure
III. Type of Business and Client Base
IV. Compliance Information
V. Tax Information
SWIFT KYC Registry – 2014 – Confidentiality: Public
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Registry Controls
• Fact-based and documented
validation process
• Yearly revalidation of all information
• Data quality ratings visible to all
• No judgemental or opinion-making controls
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SWIFT Profile Level 1
Does Bank A have correspondent
banking activity with entities located
in countries under close monitoring of
the FATF?
0%
<5%
5-20%
>20%
Direct (in/outbound flows)
Indirect (originating/beneficiary
country)
0%
<5%
5-20%
>20%
All currencies
US Dollar
All except US Dollar
Payments
Trade Finance
SWIFT Profile A new way to bring more transparency on your correspondent’s activities
Direct (in/outbound flows)
Indirect (originating/beneficiary
country)
SWIFT Profile Level 2 - “Nested Countries”
Bank A’s correspondent banking
traffic with concerned FATF
jurisdictions. Share per country:
All currencies
US Dollar
All except US Dollar
Payments
Trade Finance
SWIFT Profile Level 3 - “Nested Correspondents”
Identities of Bank A’s nested
correspondents per concerned jurisdiction:
All currencies
US Dollar
All except US Dollar
Payments
Trade Finance
Country BIC Code Bank Name
Turkey TRBATRIS Turkish Bank A
TRBATRIS Turkish Bank B
TRBATRIS Turkish Bank C
TRBATRIS Turkish Bank D
TRBATRIS Turkish Bank E
TRBATRIS Turkish Bank F
TRBATRIS Turkish Bank G
TRBATRIS Turkish Bank H
TRBATRIS Turkish Bank I
Indonesia IDBAIDJX Indonesian Bank A
IDBAIDJX Indonesian Bank B
IDBAIDJX Indonesian Bank C
IDBAIDJX Indonesian Bank D
IDBAIDJX Indonesian Bank E
IDBAIDJX Indonesian Bank F
IDBAIDJX Indonesian Bank G
IDBAIDJX Indonesian Bank H
IDBAIDJX Indonesian Bank I
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Mock-up examples
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Mock-up examples
Create draft
Submit draft
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Request access to counterparties’ data
Mock-up examples
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The Benefits
Reduced
complexity
Greater
transparency Saves time
and money
standardisation effectiveness efficiency
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January ’14
• Formal announcement of KYC Registry initiative
• Start of KYC Working Group
• Begin data collection with Working Group
September ’14
• Open KYC Registry for data contribution by a number of selected banks
December ’14
• Open KYC Registry for data contribution and consultation by all banks
• Commercial launch of KYC Registry
Bootstrap Controlled ramp-up
General availability
Timeline The journey starts today
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Q&A
?
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Thank you
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