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SWIFT Financial Crime
Compliance
UNIVERSWIFTNET – March 2017
Benjamin Zaug
Senior Product Expert Financial Crime and Compliance Initiatives EMEA
Filtering – Why should it be a priority?
Sanction Violations are not just for Banks
Fines appear to be similar or lower compared to the
ones for banks a few years ago.
The first identified violations.
…Higher fines could come with repeated infringement
Investigations are also ongoing:
Multinationals with US operations
European Corporations
This impacts:
FX houses
Remittance
business
Payment Service
Providers
Other corporates
such as logistics,
pharmaceuticals,
energy, etc…
Why should Corporates screen their payments?
Screening of payments isn’t always compulsory
… but banks are asking more and more from clients.
Corporates may fall under obligations with OFAC if:
It processes USD payments
It has US operations (the group has to oblige)
It buys US goods
One of the team member of the payment team is a US individual
Etc…
Compliance impacts the STP rate. A whole file can be rejected for 1
suspicious transaction, slowing down/rejecting thousands of
payments.
Being under investigation or fined has a huge impact on Corporates
Reputational Risk. Some very large Corporates have suffered from
the actions of a few individuals
Risk profile
Identification
And due
diligence
Operations
Back office
activities
Ongoing due
diligence
Correspondent
Behavioral
monitoring
Start Business
Financial Crime Compliance For Corporates
List management
Sanction testing
Sanction testing
Sanction screening
Name Screening
Name Screening
Sanctions Screening Service
Simplicity
User friendly interface, easy to configure
No hardware nor software investment needed
Strong reporting capacity embedded
Quality assurance reporting included
with
Powerful
Comprehensive database of Sanction lists
updated and enhanced centrally
Good-guys and bad-guys capacity
embedded
Hit reduction rules centrally manage
Powerful algorithm including Fuzzy logic
and string matching
Screening transactions in real time
Screening Meeting regulatory demands
Interface Managing cost and resources
Sanctions Screening – an “all in one” centrally hosted solution
600+ customers including 20 central banks Using a best-in-class filter combined with
updated sanction lists and user friendly interface
Public Sanctions lists available
Country Description
Norway
Ministry of Foreign Affairs (MFA) list
MFA United Nations list
MFA Countries Embargoes
Singapore Monetary Authority of Singapore - Investor Alert List
Terrorism (Suppression of Financing) Act
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 (FINCEN)
OFAC Specially Designated Nationals
OFAC Embargoed Countries
OFAC non-Specially Designated Nationals, including: • OFAC Palestinian Legislative Council • OFAC Part 561 • OFAC Foreign Sanctions Evaders • OFAC Sectoral Sanctions Identifications • OFAC Non-SDN Iranian Sanctions Act
Public sanctions lists
updated by SWIFT daily
36 Private lists &
Good-guys lists managed
by the users
Country Description
Australia Department of Foreign Affairs and Trade (DFAT)
DFAT Autonomous list
DFAT Country Embargoes
Canada Office of the Superintendent of F.I. (OFSI)
OSFI - United Nations Act Sanctions
Department of Foreign Affairs and Trade (DFAIT)
DFAIT Countries Embargoes
European Union
European Official Journal
EU Countries Embargoes
EU Ukraine Restrictive Measures
France Journal Officiel français
Hong Kong Hong Kong Monetary Authority (HKMA)
HKMA Countries Embargoes
Japan Ministry of Finance
Special Measures
Netherlands Frozen Assets List - Dutch Government
New Zealand New Zealand Police
China Ministry of Public Security of the PRC
Ukraine State Financial Monitoring Service of Ukraine
National Security and Defense Council
AND Research-based ownership lists
Implementation options
SWIFT Format only
Transparent routing of FIN transactions
to the service using FIN-Copy
Few weeks
Zero
Limited
FIN Cat 1, 2, 4, 7, MT910
Any Formats
Query/response screening of all
transaction types
Few Months
Limited
Unlimited
All transaction types
Your institution Your correspondent
1
2
3
Your institution Your correspondent
1 2
3
Scope
Flexibility
Footprint
Timeframe
Transactions
Screened
Granularity
on what is filtered
Installation &
integration
Implementation
timeline
Same service, same end-user experience, different technical implementation.
Name Screening Service
Institutions have growing requirements to remain compliant, to ensure they avoid regulatory
breaches, de-risking, and reputational damage.
Sanctions, Anti Money Laundering, Bribery and Corruption are all now key aspects of
compliance.
However, the number of areas within an institution which require screening are growing.
Institutions are looking for cost effective ways to implement easy to use and effective tools
directly into their existing processes which allow them to remain compliant.
Screening Environments
Trade Clients
Onboarding Suppliers Employee
Hiring Treasury EDD
How does NSS Online work?
A powerful
matching
algorithm
generates an
overall score for
each entry
Public Lists OFAC, EU, UN,
HMT…
PEP, Additional Research, Adverse Media
Private Lists Internal AML Policy Lists
Matching Elimination
Criteria
Date of Birth Range comparison
Gender comparison
Country
Security Ensured
by Physical Tokens
Data
NSS Results
Enter each
entity, with
additional
information
.
Full Audit Reporting
Hit
generated
Against an
entity Adjustable
Threshold
Entities
Sanctions List Distribution Service
Data Challenges
Example of how source data is
presented:
• It is difficult to load into filters
• It requires standardization
List Content Challenges
FIs want to use source lists for transaction screening. As these are the entities
regulators require they screen for, and nothing else. Moving to sources lists from
Commercial Lists can help reduce costs.
Process Challenges Sourcing:
• Multiple regulatory authorities
• No Common update cycle
Difficulties in formatting:
• No alignment in formats between issuing
authorities
• No Standard in the way data is presented
• Poor data quality
• Operational risk due to manual processes
Loading data:
• multiple lists in multiple formats
SLD Standardization, Verification, Assurance
• SLD’s Structure will provide increased Effectiveness and Efficiency
• For example: Taking information from comment/remarks fields and placing it into the correct fields.
• No loss of source data, while transforming into a standardised format.
• SWIFT are using the data model and format endorsed by most regulators
Original Source
SLD Structured Data
First Name Middle Name Last Name Full Name Address Country DOB Remark
Jon Harry Ripley 848 Malibu United States Possible Dates of birth 4/5/1968 and 6/3/1967
Also known as Joe Ripley. Believed to be in
Afghanistan.
First Name Middle Name Last Name Full Name Address Country DOB Remark
Jon Harry Ripley Jon Harry Ripley 848 Malibu United States 4/5/1968
6/3/1967
Possible Dates of birth 4/5/1968 and 6/3/1967
Also known as Joe Ripley. Believed to be in
Afghanistan.
Joe Ripley Joe Ripley 848 Malibu United States 4/5/1968
6/3/1967
Possible Dates of birth 4/5/1968 and 6/3/1967
Also known as Joe Ripley. Believed to be in
Afghanistan.
Questions….
Mickaël Thomas
Head of Corporate Business Western Europe
Ben Zaug
Senior Product Expert Financial Crime and Compliance Initiatives
EMEA
Laetitia Angot
Commercial Manager France Monaco
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