ARC 2014 SWIFT Compliance

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Find out how SWIFT's Compliance Portfolio can help you

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ARC 2014 SWIFT Compliance

  1. 1. Compliance Marrakech, June 2014
  2. 2. Compliance • Sanctions Screening • SWIFT KYC Registry
  3. 3. A quick and easy route to comply with sanctions regulations Sanctions Screening
  4. 4. 4 Sanctions Fines
  5. 5. Context • Regulatory scrutiny and enforcement of sanctions policies is increasing • Available screening solutions complex and costly to maintain • Challenges for low-volume financial institutions 5 SWIFT offers a centralised Sanctions Screening service for low volume clients
  6. 6. Your institution Sanctions Screening over SWIFT 6 Your correspondents • Screening engine & user interface • Centrally hosted and operated by SWIFT • No local software installation & integration • Real-time • Sanctions list update service
  7. 7. Public, Private & Good Guys Lists 7 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
  8. 8. Settings 8 Transaction Type (Domestic/International) Message Categories (1, 2, 4, 7) Public Lists Message Types
  9. 9. 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 9 Outgoing transaction 1 3 2 4 Transaction is delivered as-is (no hit or false positive) Receiving institution
  10. 10. Service overview – as a receiver 10 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
  11. 11. Screening Report 11
  12. 12. Audit Report 12
  13. 13. 13 • Easy to implement • Simple to use • Cost efficient • Compliance • Peace of mind Benefits
  14. 14. 4 June 2014 193 Clients 83 Countries
  15. 15. Sanctions Screening Demo Demo
  16. 16. 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
  17. 17. Your institution Your correspondents The Level 1 user selects one of the pending alerts to view the details
  18. 18. 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
  19. 19. Your institution Your correspondentsL2 user Abort or Flag the message Release the message
  20. 20. Your institution Your correspondentsL2 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
  21. 21. Your institution Your correspondentsL2 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
  22. 22. • 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
  23. 23. InterfaceAlliance Access Connector for Sanctions Back Office Sanctions Screening FINInterface 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 23
  24. 24. 24 Q&A ?
  25. 25. SWIFT KYC Registry
  26. 26. 26 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
  27. 27. 27 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)
  28. 28. 28 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
  29. 29. 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
  30. 30. 30 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
  31. 31. 31 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
  32. 32. 32 Mock-up examples
  33. 33. 33 Mock-up examples Create draft Submit draft
  34. 34. 34 Request access to counterparties’ data Mock-up examples
  35. 35. 3535 The Benefits Reduced complexity Greater transparency Saves time and money standardisation effectiveness efficiency
  36. 36. 36 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
  37. 37. 37 Q&A ?
  38. 38. Thank you 38

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