SWIFT Financial Crime Compliance Initiatives - Luc Meurant
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Transcript of SWIFT Financial Crime Compliance Initiatives - Luc Meurant
SWIFT Business Forum
Frankfurt 2015
Update on SWIFT’s Financial Crime
Compliance initiatives
Luc Meurant, Head of Banking Markets and
Compliance Services, SWIFT
Frankfurt, 22 April 2015
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
(opportunity for scale economies)
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
your sanctions
environment.
The KYC
Registry
One global
source of KYC
information for
correspondent
banking.
Compliance
Analytics
Enhanced
understanding &
management of
financial crime-
related risk.
So far, 4 new services with a
focus on correspondent banking
Financial Crime Compliance
SANCTIONS KYC ANALYTICS
Financial Crime Compliance Utility
Securities
Industry?
Corporates?
GO DEEPER GO FASTER GO BROADER?
CORRESPONDENT BANKING
- Going forward
More on SWIFT Sanctions Screening
service
Sanctions Screening overview
Your institution
Your correspondents
Hosted and
managed
screening
engine
Daily updates
from
32 lists
+ private lists
Real-time
screening
No
additional
footprint
325 users
107 countries
17 central banks
18 branches
of Tier 1
All traffic
screening
option
introduced
Fine-
tuning
rules
Customer/
Name
Screening
Sanctions Screening roadmap
More on SWIFT Sanctions Testing
service
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
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
Peer assessment being
launched in Q2 2015
Sanctions – Other ideas being considered
• Interest is growing to consider the development
of a fully-fledged Industry Sanctions Utility:
• Built as a fully-fledged and modular service offering
(eg client/transaction screening, list management,
quality assurance, standards, reporting, services)
• Qualification work on-going (eg, partnerships,
phasing, economics)
More on SWIFT KYC Registry initiative
In a nutshell… Single source of correspondent banking KYC information
7,000+ banks on SWIFT
Trusted third party (member-owned)
Leverage SWIFT membership
process to collect ‘basic’ data
User-provided, user-controlled
Up-to-date and validated
information (through dedicated
validation teams)
A Single Standard
Validated data
A feature-rich Platform
Community-lead engagement
Unique value-add content
The founding principles
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 organisational 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
Identify areas of risk and demonstrate
your declared behaviour: the challenge
Know
Your
Customer’s
Customer
And the Answer: The SWIFT Profile
19
YOUR
CUSTOMER
CUSTOMER’S
DIRECT EXPOSURE
CUSTOMER’S
INDIRECT
EXPOSURE YOU
PUBLISHER OF
THE SWIFT
PROFILE
CONSUMER OF
THE SWIFT
PROFILE
COUNTRY OF YOUR
CORRESPONDENT’S
COUNTERPARTY
COUNTRY OF
ORDERING /
BENEFICIARY
PARTY’S BANK
KYC Registry
ALREADY MORE THAN 350 INSTITUTIONS REGISTERED
(IN MORE THAN 100
COUNTRIES)…
… AND COUNTING
HOW ABOUT YOU?
KYC – Other ideas being considered
• A selective extension of the KYC Registry to new
market segments (eg securities, corporates),
contemplating partnerships
• A Market place on top of the KYC Registry to allow
third-party providers to offer services through the
Registry
• A richer RMA application, linked to the Registry
More on Compliance Analytics
Introducing Compliance Analytics Leveraging SWIFT traffic data for risk monitoring
Single Source
Identify
Global aggregated
views
Quantify Benchmark
vs totals
Monitor
Event driven Alerting
Drive
Focus on high risk Investigate
Visual analytics
Report
Interactive generation
Look back
Retrospective reviews
Example: 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?
Analytics – Other ideas being qualified
• Enrichment with additional data and flows (possibly
non-SWIFT)
• Extended statistical and analytic capabilities
• FATF16 compliance module
• Contemplating the evolution toward a fully-fledged
AML solution, possibly in partnership
26
More on Compliance for
Securities Market
Compliance for Securities?
• Significant challenges in the industry (eg Adam Szubin’s
comments on Omnibus accounts)
• Challenges for SWIFT and its community:
– Diverging community feedback
– Multiple overlapping initiatives
• Yet, strong commitment to help the industry:
– New dedicated Securities Compliance Working Group
– Tactical extension of existing services already being worked out
– Bolder moves will be qualified
Thank you