Presentation on Compliance Services offered at SWIFT by Alex lee at the SWIFT Business Forum Philippines.

1. SWIFT Financial Crime
compliance initiatives
Alex Lee
Director, Payments Markets, SWIFT Asia Pacific

2. 2
Financial Crime Compliance Roadmap
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)
Live
Development
Qualification
Exploration
Quality
Assurance
Client/Name screening

3. 3
More on SWIFT
Sanctions Screening
service

4. Your institution
• Best-in-class Screening engine & user interface
• Centrally hosted and operated by SWIFT
• No local software installation & integration
• Real-time screening of FIN messages
• Sanctions List update service
Sanctions Screening service
Your correspondents
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5. Sanctions Screening - headlines
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184
customers
in 80
countries
Strong roadmap to
develop current service
• Adding more lists to
support local needs
• Support of any formats
(ISO20022, MX, SEPA,
domestic, proprietary,..)
• Fine-tuning rules to
optimise hit rate aligned
with your risk appetite
Expanding the screening
portfolio
• Customer screening
service for client data
against Sanctions, PEP,
Negative media,…
• Sanctions Lifeline as a
disaster recovery
service for your current
screening infrastructure

6. 7
More on SWIFT
Sanctions Testing
service

7. Effectiveness
• Provide assurance that your filter
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
• Understand parameter changes
• Manage and tune rules and “good-
guy” lists
Testing
Meeting regulatory demands
Tuning
Managing cost and resources
Sanctions compliance – balancing priorities
with
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8. Formats
Settings
Lists
Automate • Repeat • Compare • Monitor
Sanctions Testing process
Define
test objective
Download
test files
Process
test files
Upload
hit results
View
test results
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9. Results Matrix
Critical Misses
Should Be
Missed
Should Be Hit
Wasted
Investigations

10. Graphical
comparison of
the filter fuzzy
performance at 3
different
thresholds

11. Common issues identified through testing
• Outdated lists
• Missing entry
types
• Missing entries
• Language
variants not
screened
correctly
• Deleted records
still screened
Sanctions Lists
Quality
• List scope
incorrect or not
aligned with bank
policy
• Inconsistent
implementation
across filters
• Entity and alias
types screened
unnecessarily
Screening
Policy
• Inconsistent
screening
performance across
message types
• Message or file
elements not
screened properly
• Overreliance on
specific fields (e.g.
address or country)
Message
Types
• Poor fuzzy matching
performance
• Line break, word
order, sequences
• Poor performance
against particular
entries (short or long
names, aliases)
• Character set
matching issues
Filter
Weakness
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12. 13
More on
Compliance Analytics

13. Typical areas where Compliance Analytics
will bring value
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• Enterprise risk
assessment
• Correspondent
risk
assessment
Executing Risk
assessments
• Compare
anticipatory
behaviour against
country standards
• Periodic reviews
to ensure activity
is in line with
anticipated risk
• Event driven
reviews
• Retrospective
reviews
Customer Due
Diligence
• Country visits
• Correspondent
reviews
Compliance
investigations and
visits
• Volume
reconciliation
• Scenario
optimisation
• System tuning
Transaction
monitoring
• Pre-calculated
metrics
• Key
Performance/Risk
indicators
Metrics and
dashboarding

14. 15
Leveraging country of origin and beneficiary
country to provide additional insights
CA
UK
CH
YE
MT103: field 52A
MT202: field 52A
MT103: field 57A
MT202: field 58A
BIC code
BIC code

15. Example 1 : Country risk assessment– Mauritania
What business do I have with Mauritania on a global basis?
Data Sources
All figures based on Inbound payments (MT103 & MT202cov)
from correspondents in Mauritania – Full Year 2013
1. Geographical distribution of Demo Bank branches/affiliates,
based on value of inbound traffic. Payments with 4 Demo
bank affiliates in 4 countries
2. Top20 Ultimate beneficiary countries (field 57a), based on
value of inbound traffic: Top 20 out of 100 countries overall
3. Sanctioned country as ultimate beneficiary, based on value of
inbound traffic. Example has one payment sent by Bank X in
Mauritania, via Demo Bank, with Cuba as ultimate beneficiary
country
Value distribution
2. Ultimate beneficiary countries – Top 20 3. Do any flows end up in a Sanctioned country?
1. How many of my branch / affiliates receive payments from Mauritania?
4 branches in 4
countries
Correspondent CORSMRMR in
Mauritania has sent me one payment
in USD that ends up in Cuba
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16. 17
Example 2: Specific Correspondent Risk assessment
Where are payments originating from? Ending up in?
1. What are the higher risk
originating countries?
2. Which of my affiliates are
involved in these flows?
3. What are the ultimate
beneficiary countries?

17. Example 3: Monitor correspondent relationships at group
level
Active / Dormant / Unused RMAs
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1. RMAs opened in 2012 and status
(active, dormant, unused)
2. Geographical distribution
of new inbound
relationships
3. Are these relationships in
high risk jurisdictions as per
FATF classification?

18. Example 4: Value range distribution by correspondent
Is value distribution in line with anticipated behaviour?
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Bank 1
Bank 2
Bank 3
Bank 4
Bank 5
Bank 6
Bank 7
1. What is the value
distribution from my
correspondents in Nigeria?
2. How has it evolved over
time?

19. 20
More on SWIFT
KYC Registry initiative

20. The Context
An unprecedented challenge to comply with KYC legal requirements
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SWIFT
KYC
Registry
Complex and
inconsistent requirements
across jurisdictions
Cumbersome, repetitive
and inefficient bilateral
exchanges
Unavailability and poor
quality of information
Complex and
inconsistent requirements
across jurisdictions
Cumbersome, repetitive
and inefficient bilateral
exchanges
Unavailability and poor
quality of information

21. Collection of data and documents
• Structured data
• Supporting documents
• Maintenance
• Archiving and versioning
Controls
• Completeness, validity, accuracy
Reporting and monitoring
• Platform activity reporting and practices
• Audit trail
• Notifications of changes
Value added services
• SWIFT profile
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Inscope
Outofscope
Name screening
• List screening (PEP, blacklist checking)
• Alert management or bad press
Risk scoring
• SWIFT proposed risk score
• Communication on (non)-accepted
counterparties
Due Diligence
• Around intermediaries
Regulatory watch and market
practices
• Monitoring of legal/regulatory updates
What will the SWIFT KYC Registry be
in its first phase

22. 23
SWIFT Profile
A new way to bring more transparency on your correspondents’ activities
• Objective and factual, initially based on FIN traffic
• Helps validate declared behaviour
• Substantiates risk rating process
• Different levels of granularity up to the level of
nested correspondents
• Optional and shared at bank’s discretion
• Specific, transparent and unambiguous
• Does not contain competitive information
SWIFTProfile

23. 24
SWIFT Profile – Granularity
SWIFT Profile
Level 3 – “Nested Correspondents”
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
SWIFT Profile
Level 1
Does Bank A have correspondent
banking activity with entities
located in countries under close
monitoring of the FATF?
Yes
No
Identities of Bank A’s
correspondents per concerned
jurisdiction:
SWIFT Profile
Level 2 – “Nested Countries”
Bank A’s correspondent banking
traffic with concerned FATF
jurisdictions. Share per country:

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January ’14
• Formal announcement
of the KYC Registry
initiative
• Start of KYC Working
Group & data
contribution
September ’14
• Open the Registry for
data contribution by a
number of selected
banks
December ’14
• Open the Registry for
data contribution and
consultation by all
banks
• Commercial launch of
the Registry
Timeline
The journey starts today
Bootstrap Controlled
ramp-up
General
availability

25. Thank you
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