larc2013 - sanctions compliance

Sanctions Compliance

John Taboada – SWIFT

Andrea Susana Jimenez –

Bancolombia

James Wills - SWIFT

How do you ensure

your screening

solution works ?

Can you make it

more Effective?

more Efficient?

Banks are facing a challenge

SWIFT Latin American Regional Conference - 2013 11-12 July 2013 2

3 SWIFT Latin American Regional Conference - 2013 11-12 July 2013

The challenge (and costs) keeps growing…


List Management Challenges

• a. Applying the correct list(s) to particular

customers/transactions in multiple jurisdictions

• b. Frequency of list updates

– i. In 2011, OFAC updated its programs, on average, every

4 days

– ii. In 2011, there were 10 instances where OFAC updated

multiple times intra-day (includes both list and program

changes)

– iii. Cascades of updates, for example, when OFAC additions

are picked up by HMT, then EU.

• c. Overall list volume (OFAC; for example, 5074

entities, 6878 aliases, and 8918 addresses)


List Content Challenges

• a. Indirect listings (or, listings that require the institution to do additional

research in order to implement)

– i. Listing of Tidewater required research into the specific ports which they

operated.

– ii. Listings that include “all other branches or offices worldwide”

– iii. Companies in which a listed entity has more than 50% interest.

– iv. Listed vessels changing names, countries of registration, ownership,

management


List Content Challenges • b. Inconsistent listings (across lists)

– i. There are 112 spelling variations in Muammar Kaddafi’s name in print media

– ii. The OFAC list provides 8 of them.

– iii. The UN sanction uses only 1 form of the name.

– iv. The form used in the UN sanction does not match any of the 8 in the OFAC listing.

7

Qaddafi, Muammar

Al-Gathafi, Muammar

al-Qadhafi, Muammar

Al Qathafi, Mu'ammar

Al Qathafi, Muammar

El Gaddafi, Moamar

El Kadhafi, Moammar

El Kazzafi, Moamer

El Qathafi, Mu'Ammar

Gadafi, Muammar

Gaddafi, Moamar

Gadhafi, Mo'ammar

Gathafi, Muammar

Ghadafi, Muammar

Ghaddafi, Muammar

Ghaddafy, Muammar

Gheddafi, Muammar

Gheddafi, Muhammar

Kadaffi, Momar

Kad'afi, Muàmar al-

Kaddafi, Muamar

Kaddafi, Muammar

Kadhafi, Moammar

Kadhafi, Mouammar

Kazzafi, Moammar

Khadafy, Moammar

Khaddafi, Muammar

Moamar al-Gaddafi

Moamar el Gaddafi

Moamar El Kadhafi

Moamar Gaddafi

Moamer El Kazzafi

Mo'ammar el-Gadhafi

Moammar El Kadhafi

Mo'ammar Gadhafi

Moammar Kadhafi

Moammar Khadafy

Moammar Qudhafi

Muàmar al-Kad'afi

Mu'amar al-Kadafi

Muamar Al-Kaddafi

Muamar Kaddafi

Muamer Gadafi

Muammar Al-Gathafi

Muammar al-Khaddafi

Mu'ammar al-Qadafi

Mu'ammar al-Qaddafi

Muammar al-Qadhafi

Mu'ammar al-Qadhdhafi

Muàmmar al-Qadhdhāfī

Mu'ammar Al Qathafi

Muammar Al Qathafi

Muammar Gadafi

Muammar Gaddafi

Muammar Ghadafi

Muammar Ghaddafi

Muammar Ghaddafy

Muammar Gheddafi

Muammar Kaddafi

Muammar Khaddafi

Mu'ammar Qadafi

Muammar Qaddafi

Muammar Qadhafi

Mu'ammar Qadhdhafi

Muammar Quathafi

Mulazim Awwal Mu'ammar Muhammad

Abu Minyar al-Qadhafi

Qadafi, Mu'ammar

Qadhafi, Muammar

Qadhdhāfī, Muàmmar

Qathafi, Mu'Ammar el

Quathafi, Muammar

Qudhafi, Moammar

Moamar AI Kadafi

Maummar Gaddafi

Moamar Gadhafi

Moamer Gaddafi

Moamer Kadhafi

Moamma Gaddafi

Moammar Gaddafi

Moammar Gadhafi

Moammar Ghadafi

Moammar Khadaffy

Moammar Khaddafi

Moammar el Gadhafi

Moammer Gaddafi

Mouammer al Gaddafi

Muamar Gaddafi

Muammar Al Ghaddafi

Muammar Al Qaddafi

Muammar Al Qaddafi

Muammar El Qaddafi

Muammar Gadaffi

Muammar Gadafy

Muammar Gaddhafi

Muammar Gadhafi

Muammar Ghadaffi

Muammar Qadthafi

Muammar al Gaddafi

Muammar el Gaddafy

Muammar el Gaddafi

Muammar el Qaddafi

Muammer Gadaffi

Muammer Gaddafi

Mummar Gaddafi

Omar Al Qathafi

Omar Mouammer Al Gaddafi

Omar Muammar Al Ghaddafi

Omar Muammar Al Qaddafi

Omar Muammar Al Qathafi

Omar Muammar Gaddafi

Omar Muammar Ghaddafi

Omar al Ghaddafi

SWIFT Latin American Regional Conference - 2013 11-12 July 2013

Results Matrix

Critical Misses

Should Be

Missed

Should Be Hit

Wasted

Investigations

Test For Exact Matches Coverage of EU List Impact of Filter Threshold


List Content Challenges

9

Limited overlap among lists.

Graph courtesy of

Omnicision SWIFT Latin American Regional Conference - 2013 11-12 July 2013

Context

• Regulatory scrutiny and

enforcement

of sanctions policies is increasing

• Available screening solutions

complex and costly to maintain

• Challenges for low-volume

financial institutions

SWIFT is

launching a

centralised

Sanctions

screening service

for low volume

clients


Sanctions screening – Scope

Sanctions Screening over SWIFT is a Transaction screening service:

• FIN MT messages (CAT 1, 2, 4 and 7 at launch)

• Real time

SWIFT Latin American Regional Conference - 2013 11-12 July 2013

Customer identification & verification

Initial due diligence

Customer screening

Ongoing due diligence

Customer & transaction monitoring

Transaction screening

start transacting

On-boarding process Ongoing reviews

12

Your institution

• A combination of best of breed:

– Filter application

– Sanctions List update service

• Centrally hosted and operated by SWIFT

• Real-time filtering service of FIN messages

• No local software installation & integration project

Sanctions screening service overview

Your correspondents


Service overview - as sender


Service overview - as receiver


How does it work?

Configuration

Use

Configuration

Use


Message type selection

• Incoming & outgoing flows selected by default, no possibility

to change

• All MT within a business area selected by default, possibility

to unselect MTs

Configuration

Use


User & workflow management

• Users authenticated via Secure Tokens

• Roles available:

– Administrator

– Compliance

– Level 1 user

– Level 2 user

• Choice of workflow

– Standard

– 4 eyes

Configuration

Use


List management

• Lists are centrally managed by SWIFT

• Quality assurance process

• Report on all changes for each update to lists

• Suggestions for good-guys

Sanctions Screening

Configuration

Use


Public lists supported

20

• AU - Australia Department of Foreign Affairs and Trade

• AU - DFAT Iran Specified Entities Lists

• AU - DFAT Countries Embargoes

• CA - FAIT Countries Embargoes

• CA - Canada Office of the Superintendent of Financial Institutions

• CA - Department of Foreign Affairs and Trade

• CA - OSFI - United Nations Act Sanctions

• EU - European Commission Official Journal

• EU - Europe Countries Embargoes

• FR - France Journal Officiel Français

• HK - Hong Kong Monetary Authority

• HK - HKMA Countries Embargoes

• JP - Japan Ministry of Finance

• NZ - New Zealand Police

• NL - Frozen Assets List - Dutch Government

• SG - Singapore Monetary Authority of Singapore

• CH - Switzerland Secrétariat d'Etat à l'Economie

• CH - SECO Countries Embargoes

• GB - United Kingdom Her Majesty Treasury

• GB - HMT Investment Ban list

• GB - HMT Countries Embargoes

• UN - United Nations

• UN - UN Countries Embargoes

• US - Office of Foreign Assets Control

• US - Specially Designated Nationals

• US - FinCEN

• US - Palestinian Legislative council

• US - US Countries Embargoes SWIFT Latin American Regional Conference - 2013 11-12 July 2013

How does it work?

Configuration

Use

Configuration

Use


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


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


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


Reporting & Auditing

• Service provides:

– Monthly reporting of screening activity

– Audit trail of all message ID, decisions

– Audit trail of screening parameters

• SWIFT performs:

– Periodical independent reviews to ensure effectiveness

of the filter


TCO


Weeks/

Months

Live in

days

Bancolombia

Andrea Susana Jimenez

A Case Study

Q&A

?


larc2013 - sanctions compliance

Technology