compliance services roadmap
DESCRIPTION
Presentation from SWIFT's Operations Forum Europe 2014 on 26-28 November in ParisTRANSCRIPT
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Financial Crime Compliance – SWIFT’s Roadmap
Paul Taylor
SOFE Paris, November 2014
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SIBOS 2014 Snippets Comments from Adam Szubin (Director OFAC) – Opening of SWIFT Compliance Forum;
‘..to be compliant, you must start with transparency, and you must know your customers (customer)..’
‘..awareness re sanctions is at an all time high, screening is central to a good compliance program..’
‘..queries to the agency are more sophisticated, showing an increased level of understanding..’
‘..must remember that enforcements that are seen today, reflect conduct 5-10 years old, and doesn’t necessarily reflect current behaviour..’
‘..de-risking that is proportionate, is not a concern, extreme de-risking that is not proportionate is an issue..’
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It is (still) the primary channel to deliver cross‐border banking services. Looking at cross‐border customer payments on SWIFT, those settled bank‐to‐bank were 67% of total volume.
Correspondent banking is still an attractive business - globally
More recently, despite continued healthy growth of MT 103 message levels, RMA message traffic has seen continued YOY decline = a shrinking in the number of correspondent relationships that the community is maintaining
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“The Relevance of Utilities”
“What areas of financial crime prevention lend themselves to being addressed
through a utility model?”
(% of voters)
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SWIFT 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
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The KYC Registry
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In a nutshell… The single source of correspondent banking KYC information
7,000+ banks on SWIFT
Member Owned, not for profit
Leverage SWIFT membership process to collect ‘basic’ data
Part of holistic SWIFT Compliance Roadmap (wholly industry-driven)
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• Standardised Data Set
• Secure platform and exchange
• Unique value-add features
• Community inspired and priced
The foundation…
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More concretely…
• Standardised data set for KYC in Correspondent Banking
– Unique Enhanced Due Diligence detail and supporting docs
(AML Documents including; Wolfsberg Questionnaire, AML Controls, Bank Licenses, US Patriot Act Certificates, Annual Reports …)
• Continuously validated content
– Fact-based, documented and transparent controls, change driven
• A secure and trusted data exchange platform
– Banks submit, maintain and selectively exchange data through the platform
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Identify areas of risk and demonstrate your declared behaviour: the SWIFT Profile
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Sanctions Screening
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250+ users
90+ countries
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Introducing a new Sanctions Screening option
Jan
2015
Your institution Your correspondent
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Based on Copy
Based on Connector
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Sanctions Testing
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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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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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Compliance Analytics
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Introducing Compliance Analytics Leveraging SWIFT traffic data for risk monitoring
Single Source
Identify
Global aggregated
views
Quantify Benchmark vs totals & peers
Monitor
Event driven Alerting
Drive
Focus on high risk
Investigate
Visual analytics
Report
Interactive generation
Look back
Retrospective reviews
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Typical areas where Compliance Analytics will bring value
• 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
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