SWIFT in Compliance - Sanctions, AML

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Presentation from SWIFT Compliance Day 2014 in Frankfurt

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SWIFT in Compliance - Sanctions, AML

  1. 1. SWIFT in Compliance Sanctions – AML 24x7 – Highly Resillient – Secure - Transparent 1 17. June 2014
  2. 2. 2 Community Solutions For Community Challenges Financial crime is top of the agenda for banks Financial crime is top of the agenda for banks Significant costs at stake…. Significant costs at stake…. All geographies / All types of players impacted All geographies / All types of players impacted ... Yet no competitive advantage for banks ... Yet no competitive advantage for banks Lots of duplication… … for universal challenges Lots of duplication… … for universal challenges
  3. 3. FATF 16 Information quality Compliance Analytics Sanctions list Mngt service Sanctions KYC AML Processing services Traffic analysis Standards Data repositories KYC registry AML testing & tuning Sanctions Screening Sanctions Testing & tuning (transaction & client systems) Traffic restriction (RMA) Financial Crime Compliance Roadmap Live Development Qualification Exploration Quality Assurance Client/Name screening 3
  4. 4. A hosted platform service Sanctions Screening
  5. 5.  Regulatory scrutiny and enforcement of sanctions policies is increasing  Available screening solutions complex and costly to maintain  Operational challenge for financial institutions Context around Sanctions screening SWIFT Sanctions Screening service 5
  6. 6. • Screening engine & user interface • Centrally hosted and operated by SWIFT • No local software installation & integration • Real-time • Sanctions List update service • Screening engine & user interface • Centrally hosted and operated by SWIFT • No local software installation & integration • Real-time • Sanctions List update service Sanctions screening over SWIFT Your institution Your correspondents 6
  7. 7. Screening engineSanctions Portal SWIFT Network FINcopy Transaction is copied Decision to deliver (no hit / false positive) or abort transaction (true hit) Transaction abort notification (true hit) 1 5 Service user Sending institution Managed by SWIFT Service overview – as a sender 7 Outgoing transaction 1 3 2 4 Transaction is delivered as-is (no hit or false positive) Receiving institution
  8. 8. Service overview – as a receiver 8 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
  9. 9. Public, Private & Good Guys Lists 9 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
  10. 10. 16 June 2014 199 contracts 83 countries
  11. 11. Expand the Functionality • SWIFT FIN Securities (Cat 5) • SWIFT FIN Treasury (Cat 3) • SEPA • EBICS • And Others… Provide a Full Offering • A Complementary Product • Screen Your Customer Data base – Sanctions Lists – PEP Lists – Private and Other Lists Screening of Any Format (SAF) SWIFT’s Sanctions Screening – Future Updates Customer Screening Expand Functionality & Capability
  12. 12. Optimize your filter for effectiveness and efficiency Sanctions Testing
  13. 13. In a world of unprecedented complexity and change: • How can I ensure my screening solution works? • How can I demonstrate I understand my solution and how it mitigates risks? • How can I make my screening solution more effective – and more efficient? Banks face a sanctions compliance challenge
  14. 14. Effectiveness • Provide assurance that your system works • Measure system’s fuzzy matching performance • Assess coverage of sanctions lists • Align screening system to your risk appetite Efficiency • Reduce false positives through iterative testing • Build optimisation tests into your processes Testing Meeting regulatory demands Tuning Managing cost and resources Sanctions compliance – balancing priorities with
  15. 15. • Outdated lists • Missing entry types • Missing entries • Language variants not screened correctly • Deleted records still screened • List scope • incorrect or not aligned with bank policy • Inconsistent implementation across filters • Entity and alias types screened unnecessarily • Inconsistent screening performance across message types • Message or file elements not screened properly • Overreliance on specific fields (e.g. address or country) • Poor fuzzy matching performance • Line break, word order, sequences • Poor performance against particular entries (short or long names, aliases) • Character set matching issues 15 Issues identified through testing Sanctions Lists Quality Screening Policy Message Types Filter Weakness
  16. 16. Formats Settings Lists Automate • Repeat • Compare • Monitor Sanctions testing process Define test objective Download test objective Process test files Upload hit results View test results
  17. 17. The one-off assessment report 17 This report offers a One-off Assessment of an Institution’s Sanctions Environment. It serves both Regulatory & Internal Audit purposes. Several predefined tests are executed and the bank gets a report with Test results, Observations and Recommendations.
  18. 18. 18 The one-off assessment report portfolio Audit ASSESSMENT Evaluation ASSESSMENT Scope& Purpose Deliverables • Constrained Audit • Internal & external regulatory purposes Formal Report • Comments and Explanations • Evaluation of filter performance • Identification of areas for improvement Formal Report • Findings, Recommendations & Remediation plan

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