SWIFT Compliance Roadmap 16th Finance Tech Forum

Transcription

1 SWIFT Compliance Roadmap 16th Finance Tech Forum Modern technological drivers of the financial sector 10 th April 2014 Michael Formann, Head of SWIFT Austria/CEE

2 Financial Crime Compliance Overview of SWIFT solutions -Sanctions Screenin -Sanctions Testing -BI for Compliance -KYC Registry

3 A community issue calling for a community solution Financial crime is top of the agenda for banks All geographies / All types of players impacted Significant costs at stake.... Yet no competitive advantage for banks Lots of duplication for universal challenges 3

4 Financial Crime Compliance Roadmap Standards Sanctions list service Live Development Qualification Exploration Data repository KYC registry Traffic analysis Business intelligence for Compliance Processing services Screening Testing FATF 16 Quality Traffic restriction (RMA) AML testing & tuning Sanctions KYC AML 4

5 Sanctions Screening A SWIFT hosted platform service

6 Sanctions screening over SWIFT Your institution Your correspondents Screening engine & user interface Centrally hosted and operated by SWIFT No local software installation & integration Real-time Sanctions List update service 6

7 Service overview - as sender Sending bank Outgoing transaction Transaction abort notification (true hit) 1 5 Transaction is copied SWIFT Network FIN copy 2 4 Transaction is delivered (no hit or false positive) Decision to deliver (no hit / false positive) or abort transaction (true hit) 5 Receiving bank Service user 3 Managed by SWIFT Sanctions Portal Screening engine 7

8 Service overview - as receiver Sending bank Outgoing transaction 1 SWIFT Network FIN copy Transaction is delivered as-is (no hit or false positive) 5 Transaction is delivered flagged (true hit) 5 Receiving bank Transaction is copied 2 4 Instruction to deliver transaction Managed by SWIFT 3 Service user Screening engine Sanctions Portal 8

9 Screening Report 9

10 Audit Report 10

11 2 nd April contracts 76 countries

12 Sanctions Testing Get peace of mind on your filtering applications

13 Banks are facing a Sanctions challenge How do you ensure your screening solution works? How do you demonstrate you understand your screening solution? Can you make it more EFFECTIVE (testing) AND more EFFICIENT? (tuning) 13

14 Common Sanctions compliance issues Sanctions Lists: Screening Policy: Message Types: Filter Weaknesses: Out of date sanctions lists Missing list entries Missing list entry types Removed / deleted records still being screened Language variants not being correctly screened Transliteration List scope incorrect or not aligned to bank policy Entity and alias types being unnecessarily screened Implementation inconsistencies between filters Inconsistent screening performance for different message types Message or file elements not being appropriately screened Over-reliance on specific fields (e.g. address or country) to ensure compliance Line break, word order, sequences and other issues Poor performance against particular entries (short or long names, aliases) Character set matching issues Poor fuzzy matching performance Fails to hit regulator testcases 14

15 BI for Compliance SWIFT tool and statistics to improve prevention and detection measures

16 BI for Compliance focuses on risk monitoring Objective Help Banks identify possible anomalies in their transaction activities by RISK MONITORING Providing banks with a comprehensive view of their transaction activities, across all subsidiaries, with all their correspondents Helping banks analyse their transactions by looking at the overall SWIFT activity Providing risk analysis tools/visuals to help detect potential anomalies 16

17 Activity with FATF countries Payment flows Branches relationship landscape Active/Dormant/Un-used RMA SAMPLES Better tune my AML thresholds based on value of transactions per branch Why does my activity share in high risk corridors suddenly increase? SWIFT Compliance Roadmap - December

18 KYC Registry A global platform for up-to-date and standardised information

19 KYC Registry Guiding principles Focus on banks KYC (reach to more than 7000 banks) Leverage SWIFT membership process to collect basic set of data A SWIFT managed global KYC Registry Provide enrichment based on SWIFT traffic data (SWIFT Profile) Operated and secured according to SWIFT standards Banks remain (1) owner and in control of their information and (2) responsible for their KYC process, criteria and results. 19

20 Scope Services SWIFT KYC Registry Data & documentation repository Document controls Reporting and Monitoring Value add & enrichment Name screening Risk scoring Due diligence Regulatory watch & market practices Data & Documentation Repository Collection of structured KYC data Collection of supporting documents Maintenance of data and documents Legal archiving of KYC information Document controls Verification (completeness, accuracy, validity) Reporting & monitoring KYC platform activity reporting and practices Audit trail Value add and enrichment SWIFT Profile Connection with RMA status Interaction capability through APIs Name screening List screening (PEP, blacklist checking) Alert management or bad press Risk scoring SWIFT proposed risk score Communication of (non-)accepted counterparties Due diligence Due diligence around intermediaries Regulatory watch & market practices Monitoring of legal/regulatory updates 20

21 Value-add SWIFT Profile Provide banks with a report based on analysis of traffic to support and enhance fact-based KYC assessment KYC? Objective and factual data to support and focus KYC assessment of your counterparties Estimate your risk based on your counterparty s relationships (nested banks) Bring evidence of declared behaviour (e.g. wolfsberg questionnaire) Must be specific and transparent to avoid unintended consequences or misinterpretation. Must comply with data retrieval policy and would be shared at bank s discretion 21

22 Thank you Michael Formann Head of SWIFT Austria / CEE SWIFT Fischhof 3/6 A-1010 Vienna Austria T F M E W michael.formann@swift.com swift.com