Over the past few years, financial crime compliance has moved centre stage at Sibos. This year, it comprised one of the four main conference themes.
At the opening of the compliance stream on the first day of Sibos, Stuart Levey, chief legal officer at HSBC and a former US under-secretary for terrorism and financial intelligence, warned that the financial industry has some way to go in matching its disparate approaches to compliance with the aims of governments and society in combatting criminal activity and terrorism. “The dots are not being connected, and certainly not in a real-time, iterative, and dynamic way,” he said. “If we do not collaborate better, we risk being one step behind in our efforts to keep illicit actors out of the system while also exacerbating the problem of financial exclusion.”
For Paul Taylor, head of financial crime compliance initiatives in the Americas, United Kingdom, Ireland and the Nordics, SWIFT, these observations chime with SWIFT’s own engagement in helping its community meet its compliance challenges. “Particularly interesting for us was the way Stuart Levey made a strong call for rethinking the way banks and regulators address compliance, including issues of data privacy and data sharing,” he says.
SWIFT’s involvement in compliance reflects a consensus view in the financial services industry that compliance is not a competitive differentiator, since everyone has to do it. Over the week, notes Taylor, it became clear, through the digi-voting results in the various sessions, that many participants are either using or considering using utilities as a way of meeting compliance requirements and are looking to extend that use to related domains such as sanctions.
SWIFT itself announced two new services during the Sibos week; Name Screening and a Payments Data Quality analytics and reporting service. “We received a very positive reaction from the community in both cases,” says Taylor. Introductory auditorium sessions were followed by numerous meetings and product demonstrations in the SWIFTLab.
Payments Data Quality
Payments Data Quality is a reporting and data analytics service to help financial institutions comply with new international requirements for originator and beneficiary information in payments messages.
Recommendation 16 from the Financial Action Task Force (FATF) requires originator and beneficiary information to be included in wire transfers. However, says Taylor, “The lack of standard practices for formatting some originator and beneficiary details, such as addresses and bank account numbers, can make data detection by automated systems difficult. The Payments Data Quality service provides a review of messages using verification rules developed by SWIFT in line with industry practice.”
The Sibos Auditorium session on Payments Data Quality introduced Nordea Bank as the first subscriber to the service. Lene Hedegaard Baltzarsen, senior financial anti-crime manager, Nordea, was optimistic that the service will strengthen defences for the community as a whole. “As this is a collaborative tool, banks will benefit from each other’s experience,” she said.
One aspect of the new services is a list of ‘dummy names’ – such as Mickey Mouse, or ‘My customer’ – that SWIFT has detected in some payments messages instead of accurate originator and beneficiary information. This list will be shared with Payments Data Quality customers to create a collaborative list of words that should trigger further investigation.
Name Screening
The first version of SWIFT’s Name Screening service, due to be launched in January, was also unveiled. “Our customers have embraced the concept of secure, cloud-based transaction screening solutions, and have asked us to extend this model to the screening of names and databases,” says Taylor. Name Screening combines a screening application with automatic list updates, alerts and a case management system. “Financial institutions can use the tool when onboarding new customers or when carrying out one-off checks of individuals or entities, while corporates can use it to check the names of suppliers and customers,” says Taylor.
The new service will screen against official sanctions and private lists as well as lists of politically exposed persons (PEPs) and their relatives and close associates (RCAs). SWIFT is partnering with Dow Jones to provide access to high-quality relevant risk and compliance data.
Introducing the service during the Auditorium session, Nicolas Stuckens, head of sanctions compliance services, SWIFT, pointed out that Name Screening complements SWIFT’s existing transaction screening service, Sanctions Screening, allowing for a more streamlined approach to screening customers. “At many firms, information about customers and suppliers is dispersed across different systems and databases,” he commented. “Name Screening will enable firms to automate screening through a single platform for greater accuracy and efficiency, as well as providing a demonstrable audit trail.”
SWIFT’s aim is to create a comprehensive screening utility service, covering transactions, names, list management and quality assurance, while helping to define common market practices, says Taylor. As of 2017, SWIFT’s portfolio will also include Daily Validation Reports to allow customers to identify unexpected changes associated with payments to counterparties.
Underpinning compliance efforts is the need for transparency – which Taylor suggests could help mitigate the potential consequences of de-risking for counterparts in high-risk jurisdictions; an issue to which Levey referred in his opening address. “If you are a smaller bank in a riskier jurisdiction and you become transparent making it easier for your correspondents to collect the documentation they need to reassure their own regulators, you may have less to worry about in terms of de-risking,” he says.
Beyond the new services recently launched or in the pipeline, Sibos also provided an opportunity to unveil the work that SWIFT’s compliance team is doing with Innotribe through its industry challenge. “We are working through proofs of concept with selected FinTechs and expect to have further exciting news by Sibos in Toronto,” says Taylor. □
Our customers have embraced the concept of secure, cloud-based transaction screening solutions, and have asked us to extend this model to the screening of names and databases. （News source：SWIFT）
