Compliance

Marrakech, June 2014

Compliance

• Sanctions Screening

• SWIFT KYC Registry

A quick and easy route to comply

with sanctions regulations

Sanctions Screening

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Sanctions Fines

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

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

Public, Private & Good Guys Lists

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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

Settings

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Transaction Type (Domestic/International)

Message Categories

(1, 2, 4, 7)

Public Lists

Message Types

Screening engine Sanctions 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

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

Screening Report

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Audit Report

12

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• Easy to implement

• Simple to use

• Cost efficient

• Compliance

• Peace of mind

Benefits

4 June 2014

193 Clients

83 Countries

Sanctions Screening

Demo

Demo

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

Your institution

Your correspondents

The Level 1 user selects one

of the pending alerts to view

the details

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

Your institution

Your correspondents L2 user

Abort or Flag

the message Release the

message

Your institution

Your correspondents L2 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

Your institution

Your correspondents L2 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

• 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

Interface

Alliance

Access

Connector

for

Sanctions

Back Office

Sanctions

Screening

FIN Interface

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

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Q&A

?

SWIFT KYC Registry

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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

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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)

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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

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

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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

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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

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Mock-up examples

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Mock-up examples

Create draft

Submit draft

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Request access to counterparties’ data

Mock-up examples

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The Benefits

Reduced

complexity

Greater

transparency Saves time

and money

standardisation effectiveness efficiency

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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

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Q&A

?

Thank you

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