SWIFT Compliance Services

Alleviating Compliance Pressures for

the Community

Joyce Foo

Director, Compliance Services

Agenda

• SWIFT: your compliance solutions provider

• Key industry compliance challenges

• SWIFT’s compliance portfolio

• SWIFT Sanctions Screening Solution for transaction screening

• SWIFT KYC Registry solution to improve KYC correspondent banking processes

Who Are We?

A global cooperative owned by its member banks providing core secure financial messaging services to the global financial community

22.3 million Transactions messages exchanged on average

between financial institutions

globally every day

10,800+ SWIFT users

200+ Countries and

territories

Key Industry Compliance Challenges Today

Ever increasing and

changing regulations

Significant costs in

complying with regulations

Penalties for non

compliance

All geographies / All types of

players impacted

Lots of duplication for

universal challenges Lots of different, costly,

complex solutions

No competitive

advantage for banks

Community issues calling for community solutions …

Community-inspired financial crime

compliance solutions

The KYC

Registry

One global

source of KYC

information for

correspondent

banking.

Sanctions

Screening

Hosted solution

for cost-effective

compliance with

sanctions

regulations.

Sanctions

Testing

Maximise the

effectiveness

and efficiency of

your sanctions

environment.

Compliance

Analytics

Enhanced

understanding &

management of

financial crime-

related risk.

So far, 4 new services with a

focus on correspondent banking

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

Community-inspired financial crime

compliance solutions

The KYC

Registry

One global

source of KYC

information for

correspondent

banking.

Sanctions

Screening

Hosted solution

for cost-effective

compliance with

sanctions

regulations.

Sanctions

Testing

Maximise the

effectiveness

and efficiency of

your sanctions

environment.

Compliance

Analytics

Enhanced

understanding &

management of

financial crime-

related risk.

So far, 4 new services with a

focus on correspondent banking

Compliance Analytics

Enhanced understanding and management of correspondent banking risk

Institution-wide risk assessment

• Understand payment patterns

• Enhance correspondent reviews

• Align to policy

Zero footprint

• Immediately accessible

• Consolidated rich, accurate dataset

• Interactive tools and reports

Mitigates emerging risk

• Track relationships and understand RMA status

• Understand risk concentration

Monitors payment flows

• To and from your institution

• Identify anomalies & nested activity

• Compare to peers

SWIFT Sanctions Screening

Why are Sanctions so complex?

40,000 names on lists

4 Billion fuzzy combinations

15.5 Billion $ fines levied on financial institutions for violation of sanctions regulations

1 Day

Average interval between sanctions list updates for banks active globally

-50%

Decrease in number of correspondent relationships from some US banks

+100%

Increase in alerts every 4 years due to increase in SDNs and transaction numbers

+20%

Yearly increase in names and aliases on US OFAC list

• Increasing pressure from

Regulators and Correspondents to

be sanctions compliant

• Available screening solutions

complex and costly to maintain

• Increasing challenges for low-

volume financial institutions

A centralised

screening

service hosted

by SWIFT

SWIFT Sanctions Screening- SWIFT’s centralised screening service

A SWIFT solution to screen all Payments and Trade Finance real time

Your institution

Your correspondents

SWIFT Sanctions screening over SWIFT network

• Screening engine & user interface

• Sanctions List update service with enhancements

• Minimum/no installation or integration required

• Centrally hosted and operated by SWIFT for SWIFT users

• Real-time

352 users

119 countries

17 central banks

21 branches

of Tier 1

Adoption figures

As of June 30 2015

Public Sanctions lists available

Country Description

Australia Department of Foreign Affairs and Trade

DFAT Iran Specified Entities List

DFAT Country List

Canada Office of the Superintendent of F.I.

OSFI - United Nations Act Sanctions

Department of Foreign Affairs and Trade

DFAIT Countries Embargoes

European Union

European Official Journal

EUROPE Countries Embargoes

EU Ukraine Restrictive Measures

France Journal Officiel français

Hong Kong

Hong Kong Monetary Authority

HKMA Countries Embargoes

Japan Ministry of Finance

Special Measures

Netherlands

Frozen Assets List - Dutch Government

New Zealand

New Zealand Police

Country Description

China Ministry of Public Security of the PRC

Singapore Monetary Authority of Singapore - Investor Alert List

Switzerland

Secrétariat d'Etat à l'Economie

SECO Countries Embargoes

United Kingdom

Her Majesty's Treasury

HMT Countries Embargoes

HMT Ukraine Restrictive Measures

United Nations

United Nations

UN Countries Embargoes

United States of America

Financial Crimes Enforcement Network

OFAC Embargoed Countries

OFAC Foreign Sanctions Evaders

OFAC Part 561

OFAC Palestinian Legislative Council

OFAC Sectoral Sanctions Identifications

OFAC Non-SDN Iranian Sanctions Act

OFAC Specially Designated Nationals

Public sanctions lists

updated by SWIFT daily

35

Private lists & Good-guys lists

managed by the users

Message content

Hits generated by the

message & sanctions

list identifier

Sanctions list

record detail

SWIFT Sanctions Screening - screenshot

Interface

Alliance

Access

Connector

for Sanctions

Back Office

Sanctions

Screening

FIN Interface

Different options: FIN Copy vs Connector

Back Office

SWIFT

/other network

Current FIN Copy option

Connector option New

SWIFT

Transaction to be screened

“Good” transaction

“Rejected” transaction

Screening & Audit Report

Screening Report

Audit Report: • Copy of each

alerted transaction

• Hit details

• Comments and final status

• Audit log of all transactions screened

• Audit log of all operators activity

• Audit log of public, private and good-guys list selection and activity

Quality assurance Report

• Periodical quality assurance checks on effectiveness of the service

• Measures adherence of sanctions lists to regulatory sources

• Measures exact and fuzzy matching capabilities

• Provides details on filter configuration and related impact

SWIFT Sanctions Screening - Benefits to the community

• Choose the lists you need, updated in the

system for you

• Banks already using SWIFT

for their transactions

• Enables fast compliance to sanctions

regulations

• Provides credibility for medium / small

banks that you screen effectively – helps

prevent de-risking

A service provided by

352 customers, 17 central banks, in 100+ countries

• Easy to implement

• Get started in a few weeks

• Easy to use

• Secure and resilient

• Cost effective

• Real time

The KYC Registry

Today’s market: An unprecedented challenge

to comply with KYC requirements

KYC

Utility Complex and

inconsistent requirements

across jurisdictions

Cumbersome, repetitive

and inefficient bilateral

exchanges

Unavailable and poor

quality of information

Increase in pressure to

reconcile & ‘de-risk’

Increase in AML/KYC fines

(>$3 billion/2 years)

Increase in KYC complexity:

FATF/FATCA

The Cost of FI KYC is becoming prohibitive

KYC Correspondent Banking Challenges

• 1.3m relationships by

7,000 correspondent banks over SWIFT

• Everyone wants different things,

data quality often poor

• Much time and effort needed by

compliance and relationship

managers to collate the information

• Evolving regulatory requirements

• Different in different countries

• Correspondent banks de-risking;

reducing relationships to reduce

risk & cost of KYC processes

Industry standard and platform needed, accessible to all

Community request to build it

Working group set up to design it

Single Standard agreed

Data validation to ensure quality

A feature-rich easy to use platform

Unique value-added content

Free to enter your data and share it

SWIFT KYC Registry: The Industry KYC Utility

SWIFT’s KYC Registry: the solution to KYC correspondent banking challenges

SWIFT’s KYC Registry: A utility providing a single source of correspondent banking KYC information

Launched in Dec 2014: Over 700 entities joined to date

User-provided, user-controlled

Upload your KYC information once, control

with whom you share

Up-to-date and validated information

The standard for enhanced due diligence

Trusted third party - community solution

Promotion

SWIFT and Working Group banks promoting

Always FREE

to share !

The KYC Registry : the standard set of KYC data & documents

Access Category Contains

Public Entity header Basic identification info (legal name, BIC, LEI,…)

On

Request Identification of

the Customer

Detailed information about the incorporation,

existence and regulatory status of the institution

Ownership and

Management

Structure

Detailed information on the ownership and the key

controllers of the institution such as shareholding

structure, Ultimate Beneficial Owners, directors,…

Type of Business

and Client Base

Detailed information on the business scope and

activities of the institution

Compliance

Information

Detailed information on the financial crime

compliance setup and guarantees of the institution,

such as the compliance contact details, Wolfsberg

questionnaire, AML policies and procedures, USA

Patriot Act

Tax Information Detailed FATCA-related information and general tax

data, such as the FATCA status, the GIIN, FATCA

forms and other tax identification numbers

KYC Registry28 Jun 2015

712 entities

in 138 countries

SCREENSHOTS

I want to contribute for

one of my entities

CONTRIBUTOR

I create a draft to start

filling in the information

in one of the categories

CONTRIBUTOR

I fill in the data fields

CONTRIBUTOR

I want to upload a

document

CONTRIBUTOR

I upload the document

CONTRIBUTOR

When my draft is done,

it is sent to SWIFT for

validation

CONTRIBUTOR

Why get started today with the KYC Registry?

• Removes the headache immediately from the compliance and RM team on providing

data and documents continually and answering customer questions

• Free to enter your data for your own bank entities and to allow others access to see it

• Easy to get started, simple guide on what you need to do to sign up

• Support on entering your data from SWIFT on-boarding team

• YOUR CORRESPONDENT BANKS WILL BE ASKING YOU TO SIGN UP!

To get started on KYC Registry, please contact:

joyce.foo@swift.com

SWIFT Financial Crime Compliance

Going Forward…

SANCTIONS KYC ANALYTICS

Financial Crime Compliance Utility

Go beyond

Correspondent

Banking

GO DEEPER GO FASTER GO BROADER?

CORRESPONDENT BANKING

Thank you