swift compliance services - alex lee
DESCRIPTION
Presentation on Compliance Services offered at SWIFT by Alex lee at the SWIFT Business Forum Philippines.TRANSCRIPT
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SWIFT Financial Crime compliance initiatives
Alex Lee Director, Payments Markets, SWIFT Asia Pacific
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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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More on SWIFT Sanctions Screening
service
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Your institution
• Best-in-class Screening engine & user interface • Centrally hosted and operated by SWIFT • No local software installation & integration • Real-time screening of FIN messages • Sanctions List update service
Sanctions Screening service
Your correspondents
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Sanctions Screening - headlines
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184 customers
in 80 countries
Strong roadmap to develop current service • Adding more lists to
support local needs
• Support of any formats (ISO20022, MX, SEPA, domestic, proprietary,..)
• Fine-tuning rules to optimise hit rate aligned with your risk appetite
Expanding the screening portfolio • Customer screening
service for client data against Sanctions, PEP, Negative media,…
• Sanctions Lifeline as a disaster recovery service for your current screening infrastructure
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More on SWIFT Sanctions Testing
service
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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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Formats
Settings
Lists
Automate • Repeat • Compare • Monitor
Sanctions Testing process Define test objective
Download test files
Process test files
Upload hit results
View test results
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Results Matrix
Critical Misses
Should Be Missed
Should Be Hit
Wasted Investigations
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Graphical comparison of the filter fuzzy
performance at 3 different
thresholds
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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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More on Compliance Analytics
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Typical areas where Compliance Analytics will bring value
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• 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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Leveraging country of origin and beneficiary country to provide additional insights
CA UK
CH
YE MT103: field 52A MT202: field 52A MT103: field 57A
MT202: field 58A
BIC code
BIC code
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Example 1 : Country risk assessment– Mauritania What business do I have with Mauritania on a global basis?
Data Sources All figures based on Inbound payments (MT103 & MT202cov) from correspondents in Mauritania – Full Year 2013
1. Geographical distribution of Demo Bank branches/affiliates, based on value of inbound traffic. Payments with 4 Demo bank affiliates in 4 countries
2. Top20 Ultimate beneficiary countries (field 57a), based on value of inbound traffic: Top 20 out of 100 countries overall
3. Sanctioned country as ultimate beneficiary, based on value of inbound traffic. Example has one payment sent by Bank X in Mauritania, via Demo Bank, with Cuba as ultimate beneficiary country
Value distribution
2. Ultimate beneficiary countries – Top 20 3. Do any flows end up in a Sanctioned country?
1. How many of my branch / affiliates receive payments from Mauritania?
4 branches in 4 countries
Correspondent CORSMRMR in Mauritania has sent me one payment
in USD that ends up in Cuba
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Example 2: Specific Correspondent Risk assessment Where are payments originating from? Ending up in?
1. What are the higher risk originating countries?
2. Which of my affiliates are involved in these flows?
3. What are the ultimate beneficiary countries?
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Example 3: Monitor correspondent relationships at group level Active / Dormant / Unused RMAs
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1. RMAs opened in 2012 and status (active, dormant, unused)
2. Geographical distribution of new inbound relationships
3. Are these relationships in high risk jurisdictions as per FATF classification?
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Example 4: Value range distribution by correspondent Is value distribution in line with anticipated behaviour?
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Bank 1
Bank 2
Bank 3
Bank 4
Bank 5
Bank 6
Bank 7
1. What is the value distribution from my correspondents in Nigeria?
2. How has it evolved over time?
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More on SWIFT KYC Registry initiative
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The Context An unprecedented challenge to comply with KYC legal requirements
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SWIFT KYC
Registry
Complex and inconsistent requirements across jurisdictions
Cumbersome, repetitive and inefficient bilateral exchanges
Unavailability and poor quality of information
Complex and inconsistent requirements across jurisdictions
Cumbersome, repetitive and inefficient bilateral exchanges
Unavailability and poor quality of information
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Collection of data and documents • Structured data • Supporting documents • Maintenance • Archiving and versioning
Controls • Completeness, validity, accuracy
Reporting and monitoring • Platform activity reporting and practices • Audit trail • Notifications of changes
Value added services • SWIFT profile
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I
n sc
ope
Out
of s
cope
Name screening • List screening (PEP, blacklist checking) • Alert management or bad press
Risk scoring • SWIFT proposed risk score • Communication on (non)-accepted
counterparties
Due Diligence • Around intermediaries
Regulatory watch and market practices
• Monitoring of legal/regulatory updates
What will the SWIFT KYC Registry be in its first phase
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SWIFT Profile A new way to bring more transparency on your correspondents’ activities
• Objective and factual, initially based on FIN traffic • Helps validate declared behaviour • Substantiates risk rating process • Different levels of granularity up to the level of
nested correspondents • Optional and shared at bank’s discretion • Specific, transparent and unambiguous • Does not contain competitive information
SW
IFT
Pro
file
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SWIFT Profile – Granularity
SWIFT Profile Level 3 – “Nested Correspondents”
Country BIC Code Bank NameTurkey TRBATRIS Turkish Bank A
TRBATRIS Turkish Bank BTRBATRIS Turkish Bank CTRBATRIS Turkish Bank DTRBATRIS Turkish Bank ETRBATRIS Turkish Bank FTRBATRIS Turkish Bank GTRBATRIS Turkish Bank HTRBATRIS Turkish Bank I
Indonesia IDBAIDJX Indonesian Bank AIDBAIDJX Indonesian Bank BIDBAIDJX Indonesian Bank CIDBAIDJX Indonesian Bank DIDBAIDJX Indonesian Bank EIDBAIDJX Indonesian Bank FIDBAIDJX Indonesian Bank GIDBAIDJX Indonesian Bank HIDBAIDJX Indonesian Bank I
SWIFT Profile Level 1
Does Bank A have correspondent banking activity with entities located in countries under close monitoring of the FATF?
Yes No
Identities of Bank A’s correspondents per concerned jurisdiction:
SWIFT Profile Level 2 – “Nested Countries”
Bank A’s correspondent banking traffic with concerned FATF jurisdictions. Share per country:
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January ’14
• Formal announcement
of the KYC Registry initiative
• Start of KYC Working Group & data contribution
September ’14
• Open the Registry for
data contribution by a number of selected banks
December ’14
• Open the Registry for
data contribution and consultation by all banks
• Commercial launch of the Registry
Timeline The journey starts today
Bootstrap Controlled ramp-up
General availability
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Thank you
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