SWIFT Open Day Thailand 2016 (26 April)

1

SWIFT Open Day Thailand 2016

26 April 2016

2

SWIFT Welcome Address

Eddie Haddad

Managing Director, APAC, SWIFT

//be-file02/Group/Photo-Library-Public/Royalty free images

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Trade

Treasury

Securities

Payments

Growth rates based on Year to date February 2016 vs 2015 Average Daily Messages

EMEA Americas Asia Pacific Total

SWIFT Thailand ASEAN

4.1% 5.4% 6.9% 4.7% 8.9% 4.3%

2.8% 7.1% 33.5% 6.7% 85.0% 21.8%

3.5% 13.4% 16.4% 7.3% 25.9% 6.4%

-3.2% -19.0% -5.6% -6.6% -6.7% -3.4%

3.4% 6.3% 17.4% 5.7% 29.7% 11.0%

Year to date 2016 FIN Traffic growth at a glance

<-10% -10% to 0% >0%

Key Highlights

25+ million FIN messages per year (2015)

122+ thousand FIN messages per day (Year to date Feb 2016)

+30% Increase in FIN traffic (Year to date Feb 2016)

Growth of Full year 2012

Full year 2013 Full year 2014 Full year 2015 Year to date 2016

Thailand 11.4% 17.2% 9.3% 14.8% 29.7%

Total SWIFT 3.5% 10.8% 11.0% 8.4% 5.7%

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Ave

rag

e D

aily

Mes

sag

es

FIN traffic evolution over the years

All markets

+103% vs. SWIFT +48%

Payments

+73% vs. SWIFT +46%

Securities

+211% vs. SWIFT

+54%

Treasury

23% vs. SWIFT +28%

5-year Growth Comparison based on Year to date Feb 2016 vs 2011 Average Daily Messages

Growth rates based on Average Daily Messages

Thailand ranked 8th in APAC region for Traffic Sent Ranked 28th in worldwide

*contribution to growth

Table shows only the Top 15 APAC countries

Rank YTD traffic Growth CTG* Share Rank YTD traffic Growth CTG* Share

Traffic receivedTraffic sent

Countries ranked by Traffic Sent - February 2016 YTD - Average Daily Volumes

Country Code Country name

HK Hong Kong 7 774,842 17.2% 8.3% 3.1% 8 742,669 18.5% 8.5% 2.9%

JP Japan 10 654,415 53.8% 16.7% 2.6% 10 437,750 18.0% 4.9% 1.7%

AU Australia 12 519,327 6.1% 2.2% 2.1% 12 416,907 3.9% 1.1% 1.7%

SG Singapore 15 347,582 10.4% 2.4% 1.4% 14 344,604 6.0% 1.4% 1.4%

KR Korea, Republic of 19 251,040 5.1% 0.9% 1.0% 22 152,348 13.1% 1.3% 0.6%

CN China 25 182,308 5.7% 0.7% 0.7% 17 271,657 -0.6% -0.1% 1.1%

IN India 27 134,944 12.6% 1.1% 0.5% 24 138,908 10.2% 0.9% 0.6%

TH Thailand 28 122,467 29.7% 2.1% 0.5% 28 98,016 23.5% 1.4% 0.4%

TW Taiwan 29 109,426 17.9% 1.2% 0.4% 29 87,012 7.6% 0.4% 0.3%

MY Malaysia 35 78,379 9.1% 0.5% 0.3% 42 39,660 6.8% 0.2% 0.2%

ID Indonesia 37 76,885 -5.4% -0.3% 0.3% 43 39,153 -17.5% -0.6% 0.2%

NZ New Zealand 41 65,151 10.8% 0.5% 0.3% 36 55,640 10.0% 0.4% 0.2%

PH Philippines 47 43,459 7.3% 0.2% 0.2% 47 31,835 6.7% 0.1% 0.1%

BD Bangladesh 56 21,663 20.9% 0.3% 0.1% 50 28,282 10.8% 0.2% 0.1%

VN Vietnam 59 20,450 13.6% 0.2% 0.1% 56 23,303 6.1% 0.1% 0.1%

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SWIFT 2020 – Strategic priorities

Messaging

Software

& Connectivity

Shared

Services

Many-to-Many Market

Infrastructures

CORE

COMPLIANCE

MIs

Translating S2020 to SWIFT APAC Priorities

Trends

Renewal

• Fighting financial crime, monitoring & control, compliance

recommendations.

• FATF, Basel III, FATCA, FCPA, AML, Sanctions

• ASEAN Economic Community (AEC), CIPS, Pacific

payment system

• Increasing international connectivity of infrastructures

• ISO 20022 adoption

• Demand for safer and more reliable infrastructure

• Cyber threats increasing

• CPMI-IOSCO PFMI & Annex F for CSPs

• Real-time 24-7

• Convergence btw high & low value

Payments

• New systems: ISO 20022 messaging – rapidly growing

interest in XML messaging capabilities

• Multi-currency clearing, PvP

• Extended operating hours (e.g. HK RMB 20.5 hrs)

• CPMI-IOSCO Principles • Regulatory reporting • T+2

• ASEAN Economic Community (AEC) • Regional harmonization: ABMF, ASEAN Link, HK-CN,

TW-SG, CSIF cross-border DVP • ISO 20022 adoption

• CPMI-IOSCO & Annex F for CSPs

• Issuer to investor CA announcement

• Funds hub implementation

• Collateral management

• OTC clearing

Securities

• Aging technology

• New technology (distributed ledger)

• Regional ambition-collaboration

• ISO 20022

Regulation &

compliance

Regionalisation

Resiliency &

reliability

Real-time

11

Reinventing

correspondent banking Making Real World Change

12

Power Point template - You can edit footer content by going into 'Insert' tab > 'Header & Footer' 13

Where is SWIFT with Blockchain

DLTs technology has the following key strengths including the

ability to create:

• Trust in a disseminated system;

• Efficiency in broadcasting information;

• Complete traceability of transactions;

• Simplified reconciliation; and

• High resiliency.

However……….

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1. ABN AMRO Bank

2. Australia and New Zealand Banking Group

3. Banco Bilbao Vizcaya Argentaria

4. Bank of America Merrill Lynch

5. Bank of China

6. Bank of New York Mellon

7. Bank of Tokyo-Mitsubishi UFJ

8. Natixis

9. Banco Santander

10. Bank of Philippines Island

11. Barclays

12. BNP Paribas

13. Citibank

14. CTBC Bank

15. Commerzbank

16. Credit Suisse

17. Danske Bank

18. DBS Bank

19. Deutsche Bank

20. Ecobank

21. FirstRand Bank

22. HSBC

23. Industrial and Commercial Bank of China

24. ING Bank

25. Intesa Sanpaolo

26. Investec

27. JPMorgan Chase

28. KBC Bank

29. KEB Hana Bank

30.Kasikornbank 31. Lloyds Banking Group

32. Maybank

33. Mizuho Bank

34. National Australia Bank

35. Nordea Bank

36. Oversea-Chinese Banking Corporation

37. Raiffeisen Bank International

38. Resona Bank

39. RBC Royal Bank

40. Royal Bank of Scotland

41. Sberbank

42. Skandinaviska Enskilda Banken

43. Société Générale

44. Standard Bank

45. Standard Chartered

46. Sumitomo Mitsui Banking Corporation

47. TD Bank

48. Tadhamon International Islamic Bank

49. UniCredit

50. UBS

51. United Overseas Bank

52. Wells Fargo

53.Bangkok Bank

Over 50 leading banks sign up to SWIFT’s global payments innovation

initiative

15


16 Open Day Thailand, 26 April 2016

SWIFT Chairperson Address

Pongbhoka Buddhi-Baedya

Vice President and Manager, Global Payment

Services Department, Bangkok Bank &

SWIFT User Group Chairperson


17

SWIFT Payments Innovation Initiatives:

From Disruption to Real World Change

T.S. Shankar, Managing Director, Head of Clearing &

Liquidity Products, Correspondent Banking, Transaction

Banking, Standard Chartered Bank

Qinwen Xiao

Director, Payments Markets, Asia Pacific, SWIFT


RTGS

ACH

Country A

RTRPS

• High Value Payments Modernisation

• Re-Inventing Low Value Payments

PSS

Country A

PSS

Country B

• Cross Border Payments Integration:

• Local PSS to Foreign PSS Connectivity

• Local PSS to Foreign Bank

• Local Bank to Foreign Bank Connectivity

Payment & Settlement Systems in Asia Pacific

Domestic Cross-border

ASEAN 2025 vision confirmed commitments to the following

Payment & Settlement System enhancements

Capital Account Liberalisation & Market Integration

Global Standards & ISO 20022

Cross-border trade; Remittances; Retail payment systems

Promotion and harmonisation of standards and market practices

Facilitate investment in region through deepening clearing settlement and custody linkages

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Agenda

Introduction

SWIFT Innovation: Domestic payments innovations

SWIFT Innovation: Global Payments Innovation Initiative (gpii)

Real Time Retail Payment Systems (RT-RPS) are live in 18 markets, many more planned

18 countries ‘live’

12 countries ‘exploring’ / ‘planning’ / ‘building’

17 additional Eurozone countries ‘exploring’

Planning

Eurozone

Live

22

However, Real Time Payments Innovation is not just about going faster

Open Access Simpler

Addressing API to Anything

Intelligent

Messaging

Inclusive -

extended

participant

ecosystem

Regional/global

interoperability

Extensive use of

Digital Channels,

esp. Mobile

Reduced friction for

customer

Centralized

Addressing across

banks

Alias/Proxies

instead of account

numbers

Addressing and

Overlay Services

integration

Consumed by

Corporates,

SMEs, Govt.

organizations

Transfer of

information, not

simply value

Information rich

ISO 20022

5 Strategic Objectives of RBA Timing

1. Same Day Settlements for Direct Entry 2013

2. Real time payments and immediate

availability

2016

3. More complete remittance data with

payments

2016

4. Payments outside normal banking

hours

2016

5. Easier payment addressing

mechanism

2017

5 Strategic Objectives of RBA Key Features of NPP Solution

Key features of SWIFT NPP Solution

24/7 availability

Real-time, low latency messaging in-country

ISO 20022

Addressing database service

Re-use existing SWIFT Infrastructure

Lower cost to MI and community

http://www.swift.com/about_swift/shownews?param_dcr=news.data/en/swift_com/2014/PR_AU_SWIFT.xml

Case Study - New Payments Platform Australia

How the Reserve Bank of Australia (RBA) drove change in partnership

with Australian industry …

An open, scalable, flexible interbank Real-Time Retail Payment System can support

innovation and economy development in Thailand

Basic Infrastructure

Dir

ect

Part

icip

an

ts

Ind

irect

Part

icip

an

ts Addressing Database

Switch

Network

Se

ttle

me

nt

Se

rvic

e

Overlay Services

Real-time

24/7

ISO 20022

Addressing database

Mobile, email, ID, etc.

Connected services

such as Mobile

Payments

There are 15 RTGS live on SWIFT in APAC, and many markets have adopted or in the

process of adopting ISO 20022

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• Hong Kong

• Australia

• New Zealand

• Taiwan

• Macao

• Fiji

• Sri Lanka

• Papua New Guinea

• India

• Bangladesh

These markets use SWIFT today for their High

Value Payment systems

Payment systems

• Thailand

• Singapore

• Philippines

• Brunei

• Malaysia (2015)

AU

Zengin, JP

CNAPS2,

CN IN

Low-

value

High-

value

CIPS, CN

BOJNet, JP

NZ

TH

PG

BN

SG

MY

ISO 20022 adoption in Asia-Pacific

ASEAN

VN

TH

PH

100+ PMI live on SWIFT 25

KH

ISO 20022

Impact

Assessment

Solution

Design

Strategic

Interface

choice

MyStandards

40+ years standards & community expertise

Business, implementation & standards

expertise directly from the source

Building an ISO 20022 implementation roadmap – How can SWIFT help?

26

SWIFT is the ISO 20022 registration authority

Interface & Integration

• Future ISO 20022 to

Bahtnet, RTPS

• Future route to ASEAN

integration

• Future route to

T2/EBA/CPA…

Transformation software shields users from migration impacts and cost

Migration to ISO 20022 can be challenging

Legacy Standards

FIN/MT

ISO 20022

Standards

• Proprietary standards

• Existing SWIFT

standards for cross-

border

• e.g. Brunei successfully

adopted ISO 20022 in 2014

• STP to banking system

Community

approach to

reduce cost

Agenda

Introduction

SWIFT Innovation: Domestic Payments Innovations

SWIFT Innovation: Global Payments Innovation Initiative (gpii)

Correspondent banking model is under pressure

Customers and

regulators push for

better payments service

Banks rationalize their

correspondent banking

networks

Digital innovators offer

new disruptive

solutions

End customers increasingly demanding

Domestic payments going real-time

Regulatory intensity and increasing costs

Network rationalization

Enhanced value proposition

Disintermediation

Objective: deliver a better customer payment experience

“Before”

Traditional correspondent banking

“After”

The global payments innovation initiative

1. Slow, can take multiple days

2. Expensive, multiple deducts

3. Secure and compliant

4. No transparency and predictability on cost and

time

5. Convenient and ubiquitous

6. Open and inclusive (global reach)

1. Fast(er) (start with “same day”)

2. Higher efficiency & less intermediaries

3. Secure and compliant

4. Transparent and predictable, with payments

tracking

5. Convenient and ubiquitous

6. Open and inclusive (global reach)

The objective is to first fix these key pain points

Note regarding prices: it will be at the discretion of each gpii

member to decide the pricing strategy vis-à-vis its customers,

including other financial institutions

The global payments innovation initiative

Delivering a new standard in cross-border payments

Proactively respond to evolving customer needs for more speed, transparency and predictability of

time and cost in cross-border payments

New multilateral rulebook, initially focused on business-to-business payments

Building on the foundation that banks provide in security, resiliency and compliance

Delivering real-world innovation: building on existing platform, embrace new technologies along a

strategic roadmap

Global reach, collaborative industry-wide initiative, organised by SWIFT

Open model, participation based on operational quality

Fast

Transparent

Predictable

Secure

Resilient

Compliant

Real-world innovation

Global reach

Open model

gpii aims to provide faster, transparent, predictable B2B cross border payments through a

set of mutual business rules

Payments with same day use of

funds

Transparency and predictability of

fees

End-to-end tracking of payments

Transfer of rich payment

information gpii

Initiative banks

• KBC Bank

• KEB Hana Bank

• Lloyds Banking Group

• Maybank

• Mizuho Bank

• National Australia Bank

• Natixis

• Nordea Bank

• Oversea-Chinese Banking

Corporation

• Raiffeisen Bank International

• RBC Royal Bank

• Resona Bank

• Royal Bank of Scotland

• Sberbank

• SEB

• Société Générale

• Standard Bank

• Standard Chartered

• Sumitomo Mitsui Banking

Corporation

• Tadhamon International Islamic

Bank

• TD Bank

• UBS

• UniCredit

• United Overseas Bank

• Wells Fargo.

• ABN AMRO Bank

• Australia and New Zealand Banking Group

• Banco Bilbao Vizcaya Argentaria

• Bank of America Merrill Lynch

• Bank of China

• Bank of New York Mellon

• Bank of the Philippine Islands (BPI)

• Bank of Tokyo-Mitsubishi UFJ

• Banco Santander

• Bangkok Bank

• Barclays

• BNP Paribas

• Citibank

• Commerzbank

• Credit Suisse

• CTBC

• Danske Bank

• DBS Bank

• Deutsche Bank

• Ecobank

• FirstRand Bank

• HSBC

• Industrial and Commercial Bank of China

• ING Bank

• Intesa Sanpaolo

• Investec

• JPMorgan Chase

• KASIKORNBANK

Timeline

▪ Identify drivers

▪ Define principles

▪ Announce initiative

Pilot

Promote

Define strategic roadmap

2015 2016

▪ Show early results

at Sibos

▪ Prepare for

go live

A discussion with Standard Chartered Bank on GPII T.S. Shankar

Managing Director, Head of Clearing & Liquidity Products

Correspondent Banking, Transaction Banking

Standards Chartered bank

Qinwen Xiao (moderator)

Director

Payments Markets, Asia Pacific, SWIFT

www.swift.com

37 Open Day Thailand, 26 April 2016

Alleviating Compliance Pressures for

the Thai Community

Naofumi Sukegawa, Director, Compliance Services,

APAC, SWIFT


Agenda: Alleviating Compliance Pressures for the Community

SWIFT 2020 and the Compliance focus

Global Compliance Trends, challenges and opportunities

• KYC Registry

• RMA Analysis > Clean Up > Compliance Analysis

• Sanctions Screening + Sanctions Testing

A community issue calling for a community solution…

Financial crime is top of

the agenda for banks

Financial crime is top of

the agenda for banks

Significant costs

at stake….

All geographies / All types

of players impacted

... Yet no competitive

advantage for banks

Lots of duplication…

… for universal challenges

Open Day Thailand, 26 April 2016 39

20160419 FCC_Roadmap_KYC_UG 40

Community-inspired financial crime compliance solutions

Sanctions

Screening

Hosted solution

for cost-effective

compliance with

sanctions

regulations

Sanctions

Testing

Maximise the

effectiveness and

efficiency of

banks’ sanctions

environment

The KYC

Registry

One global source

of KYC

information for

correspondent

banking

Compliance

Analytics

Enhanced

understanding &

management of

financial crime-

related risk

FCC Roadmap : Toward three inter-connected Utilities

Sanctions Analytics/AML KYC

Interconnected Utilities leveraging commonalities

and data between the products & services

Financial Crime Compliance Utility

20160419 FCC_Roadmap_KYC_UG

Comprehensive

Service offering

e.g.

• Transaction

screening

• Sanctions Testing

• List Management

• Name/Client

Screening

e.g.

• KYC Registry

• KYC Market Place

e.g.

• Compliance Analytics

(evolving toward

Bank-to-bank

monitoring)

• FATF 16

For ALL SWIFT users (small AND large) over time

41

20160419 FCC_Roadmap_KYC_UG 42

Three new services being introduced in 2016

List

Management

(Sep)

Sanctions list distribution

and management

service, also allowing

banks to manage

sanctions, PEP and

private lists

Payments Data

Quality FATF16

(Sep)

Post-fact reporting tool to

help banks identify and

address possible

violations of FATF

Recommendation 16

(originator and

beneficiary fields quality)

Name

Screening

(Dec)

On-line portal for

checking individual

names against sanctions

and PEP lists

(Batch version in 2017)

KYC Registry

SWIFT KYC Registry: The Industry KYC Utility

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

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

KYC REGISTRY

The context… an unprecedented challenge to comply with KYC legal requirements

Information is unavailable

or of poor quality

Complex, inconsistent

requirements across

jurisdictions

Cumbersome, repetitive

and inefficient bilateral

exchanges


The solution… a single source of correspondent banking information

7,000+ banks on SWIFT = 1.3M+ connections

Standardised, industry-wide solutions

User-provided, user-controlled access to

qualified KYC information

Unique content: SWIFT Profile, EDD data


A standard set of KYC data

Category I - Identification of the customer Licenses and Proof of Regulation, Certificate of Incorporation, et cetera

Legal name, auditor, regulator, addresses

Category II – Ownership and management structure Declaration of key UBO and shareholders : full names and identifying data

Board of Directors Lists: full names and identifying data

Group structure

Annual Reports, Shareholder listings, certified group and organizational charts

Category III – Type of business and client base Revenue breakdown by legal entity

Operating geographies and customer verticals

Category IV – Compliance information Enhanced AML Questions

AML docs: e.g. AML Controls, Wolfsberg Questionnaire, US Patriot Act

Category V – Tax information TIN, GIIN,FATCA information & proof of registration, documentation


Is your institution on board yet?

A look at where we are…

927 FI Groups

203 Countries

2417 Entities registered

661 APAC entities


RMA Analysis/Clean-up

and Compliance Analytics

Open Day Thailand, 26 April 2016

What is RMA

RMA (Relationship Management Application) is a SWIFT mechanism to control

the traffic you want to accept from your correspondents and vice-versa

50 RBS - BI for Compliance deep dive - March '13

50

Request

Authorization

Rejection

Revocation

Bank A Bank B

1

2

3

3’

1

2

3

3’

Bank A initiates the relationship by requesting an autorisation to bank B

Bank B Opens the relationship by sending an autorisation to Bank A

Bank A closes the relationship by sending a rejection to bank B

Bank B closes the relationship by revoking Bank A authorisation

Sender Receiver

The Benefits

Manage Correspondent Risk

Reduce KYC costs

Avoid Unwanted / Unexpected Traffic


52

RMA Best Practice

2nd RMA Analysis

3rd RMA Clean-up

1st Standard Operating Procedures

750k +

50% Of total number of outstanding

RMA relations is dormant on

average

Dormant relations with APAC BICs

RMA Analysis

Link with FIN

authenticated

transactions to define

the RMA status

• Three possible

statuses:

• Active

• Dormant

• Unused

Decide on the

authorizations “to be

removed”

• Process and

assistance to

facilitate the bulk

removal of selected

unused RMA

relationships

Data

Collection

RMA

Analysis

Business

Evaluation

Overview of existing

RMA’s inbound and

outbound

• Institution

provides the list of

RMA in XML

• Workshop

implementation

best practices

Key

Findings

Review

Key findings

• List “hot items”

among RMA

correspondence

1 2 3 4


• Analyze RMA

answer messages

• Adapt list of RMA

authorizations to

be removed if

necessary

RMA Clean-up

Kick-off

meeting

List of

authorization

Analysis of

Answers

Query

generation

1 2 3 4

RMA clean-

up

• Decide list of

authorizations “to be

deleted”

• Identify scope

• Clarify

responsibilities

• Create an RMA

Query message for

each “unwanted”

RMA

authorizations to

check importance

of relations

• Remove

“unwanted” RMA

authorisations

5


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


Sanctions Screening

and Sanction Testing

Transaction Screening – Why shall it be a priority

Complex Sanctions Environment

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

Sanctions impact

• Fines are getting bigger, but more significantly:

Cost of remediation exceeds amount of fine

Includes limitation to business (e.g. no USD clearing)

Regulators pay more attention to the quality of the screening

• Banks are terminating correspondent relationships due to:

Risk factor (weak financial crime controls )

Low return on relationship due to Cost of compliance

• Impacts large and small financial institutions

Especially smaller FIs due to the ever growing requirements

Large FIs face increased regulatory scrutiny

440+ Clients

Globally

120+ countries

16 central banks


110+ Clients

in APAC

Sanctions Screening- SWIFT’s hosted screening service

Challenges of small institutions

Regulatory scrutiny and enforcement

of sanctions policies is increasing

Increasing pressure from

correspondents to be compliant

Available screening solutions

complex and costly to maintain

Increasing challenges for low-

volume financial institutions

SWIFT provides

• Screening engine & user interface

• Sanctions List update service with

enhancements

• No additional footprint

• Centrally hosted and operated by

SWIFT

• Real time

• Simple to configure and use

A fully managed service to screen all transactions Open Day Thailand, 26 April 2016 61

SWIFT Network

FINcopy

Outgoing transaction

Screening engine

Transaction

is copied

Transaction is delivered

(no hit or false positive)

Decision to deliver (no hit / false positive)

or abort transaction (true hit)

Transaction abort notification (true hit)

1

2 4

5

5

3

Service

user

Sending bank Receiving bank

Sanctions Portal

Managed by SWIFT

Service overview - as sender

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 and decisions

Quality assurance Report

• Periodical quality assurance checks on effectiveness of the service

• Verifies that lists used mirror regulatory sources

• Measures exact and fuzzy matching capabilities

• Provides details on filter configuration and related impact

Sanctions Testing - Sales Training - Feb 2016




Sanctions Testing

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

WITH

67

Formats

Settings

Lists

Automate • Repeat • Compare • Monitor

Define

test objective

Download

test files

Process

test files

Upload

hit results

View

test results

Peer assessment is also available


Sanctions Testing process

68

www.swift.com


70

Coffee Break


Please visit the Business Intelligence & SWIFTRef demo table to….

Brunei

Laos

Myanmar

Cambodia

Philippines

Vietnam

Thailand

Indonesia

Malaysia

Singapore

2014

2015

+4.4%

-0.6%

-7.2%

+5.2%

+12.4%

+2.6%

+15.0%

-10.1%

-3.4%

+15.8%

~2.56 million

messages sent in 2015

… learn about Thai market SWIFT traffic

and our business intelligence toolset…

… learn how rich SWIFT Reference data

can enable your efficient payments…

Who’s the AUD-

correspondent of China

Everbright Bank?

What is the CHIPS id of

Zion First National Bank

What is the

financial situation

and credit rating of

Oberbank in

Austria?

Online Survey

Enter below URL: OR Scan the QR Code:

https://app.eventxtra.com/surv

eys/2440/replies/new

73

Market Infrastructure

Developments

(STP and Automation)

Kirttivarman Gunaseelan

Solution Architect, APAC, SWIFT


Agenda

Overview of SWIFT interfaces & connectivity portfolio

Deep dives – Interface products

Deep dives – Integration products


Overview of SWIFT

interfaces & connectivity

portfolio

Integration Domain Interface can be adapted to customer needs

Specialized integration skills required, available from SWIFT

Highly flexible and based on standard integration modelling

Faster to adapt and lower TCO compared to back-office change process

Powerful solution to replace costly legacy systems

Featu

res

Network

Communication

Messaging

Interface

Integration

capabilities

Market Simple Medium Complex

Alliance

Access Alliance

Lite2

Alliance

Messaging

Hub

Integration

Platform SWIFT Integration

Layer

Alliance

Gateway

Alliance

Gateway ARG

Hosted Solution

On-premises offering

SWIFT

Infrastructure

Overview


Alliance

Gateway

Alliance

Remote

Gateway

1 Connectivity

• Gateways for standard FIN

and SWIFTNet FileAct,

InterAct and Cloud.

• Possible extension to other

third party proprietary

network protocols

2 Messaging

• Standard solution for quick-

time to market integration on

existing infrastructure

• Premium solution for

complex environments with

mission critical resilience,

availability and performance

3 Business

• Business framework to support

transformation and automation

of end-to-end processes

• MI Business packages to

support he integration with

Market Infrastructures

Interfaces &

connectivity

product

portfolio 1

2

3 Business

Framework

Alliance

Access

Integration

Platform

SWIFT

Integration

layer

Alliance

Messaging

Hub Alliance

Lite 2

MI

business

package

Business services

extensions Other

Gateways

Alliance Messaging Hub (AMH)

Multi network

Premium modular bespoke solution • Modular component architecture • Multi-network support • Hook with 3rd party applications • Zero down time infrastructure A

pp

licat

ion

s FIN & SWIFTNet

SWIFT network

Key benefits

Business services

extensions

Alliance Entry / Access

SWIFT network

FIN & SWIFTNet

• Out-of-the-box solution • Adaptable and configurable • Little implementation effort • Integrate 3rd party applications

Ap

plic

atio

ns

Standard off-the-shelve product

SWIFT Integration Layer

Messaging Connectivity Business Applications

Customer offering

Low Volume Mid Volume High Volume

Connectivity

Interface

Integration SWIFT Integration

Layer

AllianceLite 2

IPLA

Alliance

Access

Alliance Gateway /

Alliance Remote

Gateway

Alliance

Gateway

Alliance

Messaging

Hub

3rd party

Gateways


Deep dives –

Interface products

Connectivity Options

Standalone Access

Traditional setup

ARG setup

• SWIFT VPN boxes (Alliance Connect)

• SWIFT security tokens (USB)

Alliance Access

or Alliance Entry

Connectivity

Components

(SAG, SNL, HSM)

Customer premise

Alliance Access

or Alliance Entry

Customer premise

Alliance Remote

Gateway


Alliance Remote Gateway – Light footprint

2

SWIFT security tokens (USB) * support for software certificates coming soon

1

SWIFT VPN boxes (Alliance Connect) • All options supported (Bronze/Silver/Silver+/Gold) allowing to connect using leased

lines and/or internet

• Secure & reliable, with resiliency built-in

3

Alliance Access or Entry on Windows, Linux, AIX

and Oracle Solaris

Alliance Remote Gateway is designed for customers with up to five BIC-8 destinations, up to 20

concurrent users, and low-to-medium message volumes (up to Alliance Gateway band 5)


Alliance

Remote

Gateway

Reduce the cost and

complexity of your on premise

infrastructures

Simplify hardware complexity, by outsourcing

the connectivity components

Reduce operational costs

Retain configuration full control

Managed and operated by SWIFT, a global

trusted party

Suitable for customers who send and receive up to 20,000 messages per day with standard throughput expectations

Alliance Remote Gateway does not provide the same functionality and resilience as a traditional Alliance Gateway


Setup and Support Services

• Remote setup and assistance with activation • End-to-end migration management • Customisation to your specific needs (*)

Setup

• Assistance with migrating FTA/FTI of Alliance Gateway to Alliance Access (*)

• Other options available – ask your SWIFT representative (*)

Additional options (*)

Operations / Support

• Standard+ Support (Global 24*7*365) • Highly secure and reliable SWIFT Operating Centres

(*) Additional charges will apply


Integrated

service

offering

Best-in-class SWIFT security,

reliability and

support

Cost-effective Save money by

letting SWIFT host

technical

components

Light footprint Hosted Gateway

Solution

Peace of

Mind

Full-featured

All SWIFT message

types, SWIFTNet

flows and Browse

services


Voice of the customer

Alliance Remote Gateway (ARG) is a comprehensive connectivity

model to SWIFT messaging system. It provides a single access

point to the SWIFT network and its services, and helps to lower our

operating cost.

“ ” Mr. Md. Abul Bashar

SEO & SWIFT

Standard Bank


Voice of the customer

Alliance Remote Gateway (ARG) is a solution hosted directly from SWIFT that allows us

to connect Alliance Access or Alliance Entry to the SWIFT network, without the needs to

operate our own Alliance Gateway, SWIFTNet Link or Hardware Security Modules (HSMs).

Letting SWIFT to manage these technical components enables us to focus on our

core business and reduces our total cost of ownership for messaging-related

activities.

“ ” Mohammad Tariqul Islam,

Manager-Trade Finance,

BASIC Bank, Banglasdesh


Deep dives –

Integration products

Back Office not designed to connect to

SWIFT

Discrepancy between internal message

formats and SWIFT formats

Yearly Standards updates to be applied to

applications

Multiple applications, multiplied

complications

Involvement of more than one vendor and

team

SWIFT

Clients

Service

Providers

Typical integration challenges


Connecting your back office to SWIFT can be very complex and requires specific expertise

Interfaces

Messaging services

A secure network

Applications

Reference data

Standards

Integrating your back office with SWIFT…

Sounds easy ?


Services

Appropriate integration

poduct

Combining services and the appropriate integration product to offer a true end-to-end solution

SWIFT’s approach to integration

Services and products


SAA Direct FileAct

FileAct

MQHA MT/MX/FileAct

AFT MT/MX/FileAct

SOAP FIN/MX/FileAct

Integration

Platform Any format

Custom adapters

Alliance Access

Adapters


Getting more out of your messaging interface

Alliance Integration Platform

Overall Architecture IPLA

Alliance Access

Ap

plic

ati

on

Inte

rfa

ce

Integration Platform

IPLA Internal API

FIN

Inte

rfa

ce

SW

IFT

Ne

t

Inte

rfa

ce

SWIFTNet

Message store Message queuesMessage routing

Validation Transformation

Application 1

Application 2

proprietary format

SWIFT format

Co

nn

ec

tors

proprietary fo

rmat

Enrichment

Alliance

Gateway

Application 3


IPLA


Example: Payment Flow - Visuals IPLA

Read File Transform to MT103 Log Event

Connector

IPLA Internal API

Message Store

Message Queues

Business Application

SWIF

TNet

In

terf

ace

Routing

IPLA

CSV

Alliance Access

MT

CSV

MT CSV MT

SWIFT network


Consistent

high standard

message

processing

Leverage

the features of

Access

Minimise

system

complexity


Benefits


IPLA

Question & Answers

? Open Day Thailand, 26 April 2016 97

Solutions for…

- effective payments

- corporate onboarding

- business strategy

Tom Alaerts, Head of Business Solutions, APAC

April 2016 – Bangkok

Effective payments Higher efficiency & lower cost, through SWIFTRef

Who’s the AUD-correspondent of

China Everbright Bank?

What is the CHIPS id of Zion First

National Bank Is this SWIFT BIC

still active?

Your needs..

Is it a bank holiday in Canada?

What is the national

clearing/sort code of Bank of

Thailand?

What is SWIFT BIC of Banco Real

in Argentina?

Where can I find the currency

code for

the Columbian Peso

What is the financial

situation and credit rating of

Oberbank in Austria?

Is this IBAN valid?

The paper BIC Directory is not sufficient !

Online access to the complete SWIFTRef database for ad-hoc look-up and research : • All BIC- codes worldwide • 900.000 National bank identifiers from 160+

countries (clearing/sort codes) • 340.000 LEIs (Legal Entity Identifier) • SEPA/IBAN data from 64 countries, including BBAN-

IBAN conversion, IBAN validation, BIC-from-IBAN derivation,

• 830.000 Bank Standing Settlement Instructions (SSI) • Bank financials, credit ratings, shareholder &

ownership info. • Country, currency and holiday information

SWIFTRef Bankers World Online For trouble-free payments, regulatory reporting and exploring new correspondent

relationships

- IBAN Plus (IBAN validation)

- BIC Directory Download / BIC Plus (BIC validation)

- Bank Directory Plus (BICs, national ids & more)

Or, files for automation:

Europe Albania France Kosovo Portugal

Andorra Georgia Latvia Romania

Austria Germany Liechtenstein San Marino

Belgium Gibraltar Lithuania Serbia

Bosnia and Herzegovina Greece Luxembourg Slovakia

Bulgaria Greenland Macedonia Slovenia

Croatia Guernsey Malta Spain

Cyprus Hungary Moldova Sweden

Czech Republic Iceland Monaco Switzerland

Denmark Ireland Montenegro United Kingdom

Estonia Isle of Man Netherlands

Faroe Islands Italy Norway

Finland Poland

Non European

countries and

territories Azerbaijan Mauritius

Bahrain Pakistan

Brazil Palestine, State of

Costa Rica Qatar

Dominican Republic Saudi Arabia

Guatemala Mauritania

Israel Mauritius

Jordan Timor-Leste

Kazakhstan Tunisia

Kuwait Turkey

Lebanon United Arab Emirates

Mauritania

Up to date IBAN info for effective payments to…

Sample view of IBAN Validator

SWIFTRef web site : swiftref.swift.com

https://swiftref.swift.com/

“Since we are on SWIFT, we have reduced

25% of our time on investigation and message

repairs. We can now more focus on further

Business development.”

Corporate Onboarding made easy

Why are corporates connecting to SWIFT?

Drivers for Corporate Banking Connectivity

• Aggregation of accounts worldwide

• Intra-day / end of day balance

• Cash forecasting for borrowing and investment activities

• Payment factories (A/P consolidation)

• Treasury centralization

• Consolidation of Bank relationships

• ERP / TMS consolidation

• Secure and resilient connectivity to banks

• ISO 20022 standards

Centralization and consolidation

Multibank cash reporting

Compliance and risk management

• Straight-through-processing

Automation

Evolution of Corporate groups on SWIFT

52 119

232

407

594

819

962

1135

1380

1539

0

200

400

600

800

1000

1200

1400

1600

1800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

YoY Corporates Adoption

Why are banks getting ready to offer SWIFT for corporate connectivity?

111

Perceived as

Innovator

with new

efficient channel

for multi-bank

corporates

New opportunities of business

GROWTH AND RETENTION

Most commonly used messages by Corporates

112

FIN

MT940 Customer Statement (3 million statements sent by AP banks in 2014)

MT942 Interim Transaction Report (4 million reports sent by AP banks in 2014)

MT101 Request for Transfer

MT300 FX Confirmation

MT320 Fixed Loan/Deposit Confirmation

MT910 Confirmation of Credit

MT900

Confirmation of Debit

FileAct 0.5 million files transferred in 2014 between AP banks and global corporates

MT101, MX pain Payment instruction

MX camt, MT940 Reporting

Is your bank ready for SWIFT for Corporates?

It is a standardised corporate environment on SWIFTNet

It is based on a closed user group

It is administered by SWIFT

Corporates can interact with all banks registered in SCORE

Banks can interact with all corporates registered in SCORE

CORPBIC1

CORPBIC2

CORPBIC3 Your institution

SCORE

Standardised

Corporate

Environment

Bank readiness certification Programme objectives

• Publish bank business capabilities over SWIFT

• Facilitate corporate reach for banks over SWIFT

• Enable corporates to increase their bank reach globally using SWIFT

• Promote the operational and commercial capabilities across banks

• Endorse bank’s best practices for corporates over SWIFT

Payments

Cash management

Treasury

114

Today’s Entry and Advanced Certification Criteria

Criteria Advanced certification Entry certification

Participate in SCORE Yes Yes

Receive FIN MT 101 and send MT 940 Yes Yes

Send MT 942 Yes No

Send/Receive files over FileAct* Yes* Yes*

Testing facilities & scripts Yes Yes

Operational documentation Yes Yes

Have SWIFT-knowledge and trained sales staff Yes Yes

Offer Basic commercial documentation Yes Yes

Provide either dedicated SWIFT-page on the bank website OR a

contact detail Yes Yes

*Bank should comply with FA implementation guide

Bank Readiness 115

http://www.swift.com/assets/corporates/documents/our_solution/implementing_your_project_fileact_implementation_guide.pdf

http://www.swift.com/assets/corporates/documents/our_solution/implementing_your_project_fileact_implementation_guide.pdf

116

Bank Readiness https://corporates.swift.com/en/certification/

“It is important to note that the Barclays

team is certified by SWIFT under the

stringent “Bank Readiness Program” and

corporates have a clear view of the extent

of the SWIFT capabilities of the bank.”

117

Business development

through

Business intelligence

119

Top 5 Counterparties for Payments with Thailand as the Sender Live international MT 103s (customer payments) and MT 202s (bank to bank

payments) from Thailand in 2015

Thailand Business Forum - Business Intelligence Insights

US +5.0% DE +10.7%

JP +6.3%

119

Currencies used

United States 62.3%

Germany 8.2%

Japan 7.6%

United Kingdom

4.3%

Singapore 3.5%

Others 14.1%

USD 68.9%

EUR 10.3%

JPY 6.8%

GBP 3.3%

SGD 2.4%

Others 8.3%

Source: SWIFT Watch Analytics

GB +2.3%

SG +2.5%

120

Top 3 End Beneficiary Countries of transactions sent to US Live international MT 103s (customer payments) and MT 202s (bank to bank

payments) from Thailand in 2015

Thailand Business Forum - Business Intelligence Insights 120

End Beneficiary Countries (EBC)

Growth: FY2015 vs FY2014

Stay in United States

291 kmsgs

(-38.8%)

China

278 kmsgs

(+7.1%)

Hong Kong

19.1 kmsgs

(+19.1%)


18.2% 17.4%

11.7%

United States China Hong Kong

Singapore 23.3%

China 13.9%

Japan 8.3%

Hong Kong 7.0%

Korea, Republic

of 6.4%

Others 41.1%

Singapore 24.3%

China 15.5%

Japan 5.8% Thailand

5.8%

Korea, Republic

of 5.0%

Others 43.7%

121

Trade: Top 5 Importers and Exporters in value Live International transactions of MT 700s to/ from Thailand in 2015



Top 5 importers of Thailand’s export

(MT700 received)

Top 5 exporters of Thailand’s import

(MT700 received)

4.9% 3.7% 3.3% 2.8% 2.4%

26.7%

5.7% 4.4% 3.7% 3.4% 3.1%

20.9%

SWIFT Business Intelligence

Banking Insights

Pre-defined dashboards

Easy access

Monitor evolution

Activity share

122

• Data Management

• Activity Share

• Network Management

• Peer Benchmarking


Sample : Bank A’s Payments growth versus Market Which counterparty country is growing importance to Thailand?

Who is growing fastest?

123

South Korea has grown importance to Thailand,

payments increased by 115%; Bank A has grown

15%.

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Thailand United States South Korea Japan Germany

Thailand Top 5 Counterparty County last 24 monthsGrowth Jun 2013 vs May 2015

(domestic and cross border MT103 total volume sent and received)

Thailand Market Growth

SICOTHBK Growth

Market SICOTHBK

12% 3%

Overall Payments volume Growth

In terms of Overall payments volume,

Bank A is lagging behind the market

growth.

Bank A

Bank Growth


Traffic/ Banking

Analytics

Customize your own report

& pre-defined dashboards

Your traffic on SWIFT

Total traffic on SWIFT

Your activity share

124


125

WATCH Analytics

Create your report and export

Dummy

DATA


Banking Analytics Premium Illustration of payment flows and intermediation (MT103 – Customer Payment)

MT103

Ordering

Customer

F50

Beneficiary

Customer

F59

Sender

BIC: BANKUS33 Receiver

BIC: BANKCNBJ

Ordering institution

BIC: ORDRSGSG

F52 Account with institution

BIC: BENECNBJ

F57

Available in Banking Analytics Premium

Data since 2013

Field 52a: Empty field/

Free format/

Option A

Field 57a: Empty field/

Free format/

Option A

Field 71A: BEN/

OUR/

SHA

Field 32A (settled currency and amount): Value buckets 0 – 500 / 500 – 2,500 / 2,500 – 10,000 / 10,000 – 50,000 / 50,000 – 100,000

100,000 – 1 million

1 million and greater

Field 33B (instructed currency and amount) Instructed currency

Instructed amount

Map clearing business and discover

where potential new revenue flows

can be generated

With Initial Ordering Country and Ultimate Beneficiary Country, I can

investigate intermediation of my payments.

Understand my Payments business

Now, I have a better understanding of my payments business to make strategic decisions

Day in the life of a customer How can Premium provide me a competitive edge

Benchmark payments charges to

market practises

With Details of charges, I compare my charging practises to the market and

have meaningful discussions with my correspondents.

Discover how the high value

payments are processed

With Value Buckets, I benchmark my high value payments route against the

market, derive my activity share and look at different opportunities

Initial Ordering

Countries

Ultimate

Beneficiary

Countries

You

sending

United States

receiving

US counterparts act as

intermediary bank for

90% of transactions

NEW NEW

What can I do with Banking Analytics Premium? Where did payments I sent to the US originate from/ end in ?

128

Extra drill-down info

• Details of charges

• Initial ordering countries

• End beneficiary countries

• LC confirmation

• LC Tenor Length

+ Value Bucket

+ Rankings

Ranking Analysis per country (dummy data)

Your BICs

Yo

ur

Co

un

trie

s

130

What our BI community is saying

Enables benchmarking the bank's market share

Identifies areas for growth – and areas where business is under threat

Empowers regional managers, country managers and relationship managers with the information they need to

get more business/save business in jeopardy

Instills discipline into use of data by business teams

Answers previously ‘unanswerable’ questions to inform business strategy

Understand how the bank is positioned in each area of the world, using Watch’s Worldwide Footprint function

Access in-depth financial information on its relationships with correspondent banks

Provide accurate information for Senior management team ahead of client meetings

Develop its business with correspondent banks, including but not limited to RMB business

Improve strategic planning, using information about correspondent bank revenues to allocate resources effectively

Benchmark the bank's traffic with the Market totals (in Volume and Value) to understand the bank’s activity share

Enables the bank to continuously benchmark itself versus competitors on a geographical basis

Prompt identification of opportunities and threats to the business

Gives the business the information they need to protect and increase the market share

Instils performance based culture across all business teams

Enables the bank to gain an evolutionary group-wide view of their business

Benchmark bank’s position against peers

Develop targeted action plans with fact-based and in-depth view of business

Better comprehensive view of the bank’s strengths and highlighting potential areas of focus

Sample reports

Quarterly Peer Benchmarking Report - Payments

Summary

Questions

134

Closing Speech

Sharon Toh

Head of ASEAN, SWIFT


135

Thank you for attending

SWIFT Open Day Thailand

2016!


136

Networking Luncheon

Red Oven

(Level 7)


Online Survey

Enter below URL: OR Scan the QR Code:

https://app.eventxtra.com/surv

eys/2440/replies/new

138


Date post:	16-Apr-2017
Category:	Presentations & Public Speaking
Upload:	swift
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SWIFT Open Day Thailand 2016 (26 April)

Presentations & Public Speaking