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Swift Compliance Services
Thailand Business Forum
16/06/2015
Andrew Burlison
Agenda
• SWIFT: your compliance solutions provider
• Key industry compliance challenges and SWIFT’s compliance portfolio
• SWIFT Sanctions Screening Solution for transaction screening
• SWIFT KYC Registry solution to improve KYC correspondent banking processes
• Proposed next steps
Who Are We?
A global cooperative owned by its member banks providing core secure financial messaging services to the global financial community
22.3 million Transactions messages exchanged on average
between financial institutions
globally every day
10,800+ SWIFT users
200+ Countries and
territories
Key Industry Compliance Challenges Today
Ever increasing and
changing regulations
Significant costs in
complying with regulations
Penalties for non
compliance
All geographies / All types of
players impacted
Lots of duplication for
universal challenges
Lots of different, costly,
complex solutions
No competitive
advantage for banks
Community issues calling for community solutions …
Sanctions Screening
Hosted, managed screening engine
• Zero footprint
• Rapid deployment
Always up-to-date
• 34 user selectable lists
• Automated daily update
• Private lists
Realtime screening
• SWIFT messages (Copy)
• Back-office integration (Connector)
Improving efficiency
• User interface
• Configurable search logic
• Screening, audit and assurance reports
“We value the ability to use a secure, automated system
that ensures we are compliant with the most up-to-date
sanctions lists” Mohamed Isa Al Mutaweh, Chief Executive Officer & Member of the
board of Directors, Al Baraka Islamic Bank
“The Sanctions Screening service allows us to comply with
the sanctions laws by blocking and flagging prohibited
transactions. It is an easy-to-use solution that keeps us up-
to-date and reduces the operational complexity in our
compliance management” Huang Weibo, Head of International Business, Huizhou Rural
Commercial Bank in China
Quick and easy transaction screening
Simple to use and cost efficient
KYC Registry
Clear global standard
• Community defined baseline
• Complete AML & governance info
• Future proofed
Streamlines governance
• Single source
• Reduces cumbersome bilateral exchange
• Validated qualified data
Simple KYC data management
• Feature rich web portal
• Portfolio management of institutional info
• Task management to track requests
SWIFT Profile
• Independent fact based verification
• Insights into counterparty behaviour
• Substantiates declared behaviour
Simple, secure, standards-driven approach to correspondent KYC
7,000+ banks on SWIFT 1.3M+ connections
Single Standard for KYC requirements
Trusted validation gives you control of your data
Unique content: SWIFT Profile, EDD data
Compliance Analytics
Enhanced understanding and management of correspondent banking risk
Institution-wide risk assessment
• Understand payment patterns
• Enhance correspondent reviews
• Align to policy
Zero footprint
• Immediately accessible
• Consolidated rich, accurate dataset
• Interactive tools and reports
Mitigates emerging risk
• Track relationships and understand RMA status
• Understand risk concentration
Monitors payment flows
• To and from your institution
• Identify anomalies & nested activity
• Compare to peers
Sanctions Testing
Ensures filter effectiveness
• Quantify & reduce risk
• Model validation and fuzzy effectiveness
• Coverage and list validation
Manages cost & resources
• False-positive reduction
• Filter tuning and optimisation
• Test cycle automation
In-house teams or assessment services
• Independent testing for in-house teams
• Assessment and peer assessment services
Insight and understanding
• Fact based filter management
• Standard reports
• Community based approach
Maximize the effectiveness and efficiency of your sanctions environment
SWIFT
Sanctions Screening
Why are Sanctions so complex?
40,000 names on lists
4 Billion fuzzy combinations
15.5 Billion $ fines levied on financial institutions for violation of sanctions regulations
1 Day
Average interval between sanctions list updates for banks active globally
-50%
Decrease in number of correspondent relationships from some US banks
+100%
Increase in alerts every 4 years due to increase in SDNs and transaction numbers
+20%
Yearly increase in names and aliases on US OFAC list
• Fines are getting bigger, but more interestingly:
– Cost of remediation exceeds amount of fine
– Includes limitation to business (e.g. no USD clearing)
– Regulators pay more attention to the quality of the screening
• Banks are terminating correspondent relationships due to:
– Risk factor (weak financial crime controls )
– Low return on relationship due to Cost of compliance
• Impacts large and small financial institutions
– Especially smaller FIs due to the ever growing requirements
– Large FIs face increased regulatory scrutiny
Sanctions impact
• Increasing pressure from
Regulators and Correspondents to
be sanctions compliant
• Available screening solutions
complex and costly to maintain
• Increasing challenges for low-
volume financial institutions
A centralised
screening
service hosted
by SWIFT
SWIFT Sanctions Screening- SWIFT’s centralised screening service
A SWIFT solution to screen all Payments and Trade Finance real time
Customer identification & verification
Initial due diligence
Customer screening
Ongoing due diligence
Customer & transaction monitoring
Transaction screening
start transacting
On-boarding process Ongoing reviews
Sanctions Screening over SWIFT is a Transaction screening service:
• FIN MT messages
• Real time
SWIFT Sanctions Screening The process challenges it addresses...
Your institution
Your correspondents
SWIFT Sanctions screening over SWIFT network
• Screening engine & user interface
• Sanctions List update service with enhancements
• Minimum/no installation or integration required
• Centrally hosted and operated by SWIFT for SWIFT users
• Real-time
SWIFT Sanctions Screening solution – Customer ramp up
April 2015
330+ institutions:
• 70 in Asia
• 20 in China
• 17 Central Banks
100+ countries
One new client every 2 working days since April 2012
Public Sanctions lists available
Country Description
Australia Department of Foreign Affairs and Trade
DFAT Iran Specified Entities List
DFAT Country List
Canada Office of the Superintendent of F.I.
OSFI - United Nations Act Sanctions
Department of Foreign Affairs and Trade
DFAIT Countries Embargoes
European Union
European Official Journal
EUROPE Countries Embargoes
EU Ukraine Restrictive Measures
France Journal Officiel français
Hong Kong
Hong Kong Monetary Authority
HKMA Countries Embargoes
Japan Ministry of Finance
Special Measures
Netherlands
Frozen Assets List - Dutch Government
New Zealand
New Zealand Police
Country Description
China Ministry of Public Security of the PRC
Singapore Monetary Authority of Singapore - Investor Alert List
Switzerland
Secrétariat d'Etat à l'Economie
SECO Countries Embargoes
United Kingdom
Her Majesty's Treasury
HMT Countries Embargoes
HMT Ukraine Restrictive Measures
United Nations
United Nations
UN Countries Embargoes
United States of America
Financial Crimes Enforcement Network
OFAC Embargoed Countries
OFAC Foreign Sanctions Evaders
OFAC Part 561
OFAC Palestinian Legislative Council
OFAC Sectoral Sanctions Identifications
OFAC Non-SDN Iranian Sanctions Act
OFAC Specially Designated Nationals
Public sanctions lists
updated by SWIFT daily
35
Private lists & Good-guys lists
managed by the users
Message content
Hits generated by the
message & sanctions
list identifier
Sanctions list record
detail
SWIFT Sanctions Screening - screenshot
Interface
Alliance
Access
Connector
for Sanctions
Back Office
Sanctions
Screening
FIN Interface
Different options: FIN Copy vs Connector
Back Office
SWIFT
/other network
Current FIN Copy option
Connector option New
SWIFT
Transaction to be screened
“Good” transaction
“Rejected” transaction
Implementation options
Copy option
Transparent routing of FIN transactions
to the service using FIN-Copy
Few weeks
Zero
Limited
FIN Cat 1, 2, 4, 7
Connector option
Query/response of all transaction types
through API call to the service
Few Months
Limited
Enhanced
All transaction types
Your institution Your correspondent
1
2
3
Your institution Your correspondent
1 2
3
Limitations
Flexibility
Footprint
Timeframe
Transactions
Screened
Granularity
on what is filtered
Installation &
integration
Time to
compliance
Screening & Audit Report
Screening Report
Audit Report: • Copy of each
alerted transaction
• Hit details
• Comments and final status
• Audit log of all transactions screened
• Audit log of all operators activity
• Audit log of public, private and good-guys list selection and activity
Quality assurance Report
• Periodical quality assurance checks on effectiveness of the service
• Measures adherence of sanctions lists to regulatory sources
• Measures exact and fuzzy matching capabilities
• Provides details on filter configuration and related impact
SWIFT Sanctions Screening - Benefits to the community
• Choose the lists you need, updated in the
system for you
• Banks already using SWIFT
for their transactions
• Enables fast compliance to sanctions
regulations
• Provides credibility for medium / small
banks that you screen effectively – helps
prevent de-risking
A service provided by
330 customers, 17 central banks, in 100+ countries
• Easy to implement
• Get started in a few weeks
• Easy to use
• Secure and resilient
• Cost effective
• Real time
Going Live
• Order “live implementation”
• Define Users in Live portal
• Configure Live portal ( lists, message types )
• When fully ready, put lists on blocking mode
And you are live!
The KYC Registry
SWIFT KYC Registry Overview
• What are the typical KYC challenges in the correspondent banking space?
• How does SWIFT’s KYC Registry solution address these challenges?
• What are the benefits of SWIFT’s KYC Registry solution?
• How do you get started
KYC Correspondent Banking Challenges
• 1.3m relationships by
7,000 correspondent banks over SWIFT
• Everyone wants different things,
data quality often poor
• Much time and effort needed by
compliance and relationship
managers to collate the information
• Evolving regulatory requirements
• Different in different countries
• Correspondent banks de-risking;
reducing relationships to reduce
risk & cost of KYC processes
Industry standard and platform needed, accessible to all
Customer identification & verification
Initial due diligence
Customer screening
Ongoing due diligence
Customer & transaction monitoring
Transaction screening
start transacting
On-boarding process Ongoing reviews
Onboarding and periodic review of correspondent banking relationships
KYC Registry The process challenges it addresses…
Community request to build it
Working group set up to design it
Single Standard agreed
Data validation to ensure quality
A feature-rich easy to use platform
Unique value-added content
Free to enter your data and share it
SWIFT KYC Registry: The Industry KYC Utility
SWIFT’s KYC Registry: the solution to KYC correspondent banking challenges
SWIFT’s KYC Registry: A utility providing a single source of correspondent banking KYC information
Launched in Dec 2014: Over 400 entities joined to date
User-provided, user-controlled
Upload your KYC information once, control
with whom you share
Up-to-date and validated information
The standard for enhanced due diligence
Trusted third party - community solution
Promotion
SWIFT and Working Group banks promoting
Always FREE
to share !
Upload, update, manage, share
and collect your KYC data in a
single place
+ features for
User-controlled access
Portfolio & task Management
Export, report and audit
Download the video demos at
www.betterkyc.com
KYC Registry in action
The KYC Registry : the standard set of KYC data & documents
Access Category Contains
Public Entity header Basic identification info (legal name, BIC, LEI,…)
On
Request Identification of
the Customer
Detailed information about the incorporation,
existence and regulatory status of the institution
Ownership and
Management
Structure
Detailed information on the ownership and the key
controllers of the institution such as shareholding
structure, Ultimate Beneficial Owners, directors,…
Type of Business
and Client Base
Detailed information on the business scope and
activities of the institution
Compliance
Information
Detailed information on the financial crime
compliance setup and guarantees of the institution,
such as the compliance contact details, Wolfsberg
questionnaire, AML policies and procedures, USA
Patriot Act
Tax Information Detailed FATCA-related information and general tax
data, such as the FATCA status, the GIIN, FATCA
forms and other tax identification numbers
KYC Registry Before ordering
KYC Registry Before ordering
Why get started today with the KYC Registry?
• Removes the headache immediately from the compliance and RM team on
providing data and documents continually and answering customer questions
• Free to enter your data for your own bank entities and to allow others access to
see it
• Easy to get started, simple guide on what you need to do to sign up
• Support on entering your data from SWIFT on-boarding team
• YOUR CORRESPONDENT BANKS WILL BE ASKING YOU TO SIGN UP!
To get started on KYC Registry, please contact Andrew Burlison on:
SCREENSHOTS
I want to contribute for
one of my entities
CONTRIBUTOR
I create a draft to start
filling in the information
in one of the categories
CONTRIBUTOR
I fill in the data fields
CONTRIBUTOR
I want to upload a
document
CONTRIBUTOR
I upload the document
CONTRIBUTOR
When my draft is done,
it is sent to SWIFT for
validation
CONTRIBUTOR
