Post on 05-Jul-2015
description
Financial Crime Compliance – SWIFT’s Roadmap
Paul Taylor
SOFE Paris, November 2014
SIBOS 2014 Snippets Comments from Adam Szubin (Director OFAC) – Opening of SWIFT Compliance Forum;
‘..to be compliant, you must start with transparency, and you must know your customers (customer)..’
‘..awareness re sanctions is at an all time high, screening is central to a good compliance program..’
‘..queries to the agency are more sophisticated, showing an increased level of understanding..’
‘..must remember that enforcements that are seen today, reflect conduct 5-10 years old, and doesn’t necessarily reflect current behaviour..’
‘..de-risking that is proportionate, is not a concern, extreme de-risking that is not proportionate is an issue..’
It is (still) the primary channel to deliver cross‐border banking services. Looking at cross‐border customer payments on SWIFT, those settled bank‐to‐bank were 67% of total volume.
Correspondent banking is still an attractive business - globally
More recently, despite continued healthy growth of MT 103 message levels, RMA message traffic has seen continued YOY decline = a shrinking in the number of correspondent relationships that the community is maintaining
“The Relevance of Utilities”
“What areas of financial crime prevention lend themselves to being addressed
through a utility model?”
(% of voters)
SWIFT 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
The KYC Registry
In a nutshell… The single source of correspondent banking KYC information
7,000+ banks on SWIFT
Member Owned, not for profit
Leverage SWIFT membership process to collect ‘basic’ data
Part of holistic SWIFT Compliance Roadmap (wholly industry-driven)
• Standardised Data Set
• Secure platform and exchange
• Unique value-add features
• Community inspired and priced
The foundation…
More concretely…
• Standardised data set for KYC in Correspondent Banking
– Unique Enhanced Due Diligence detail and supporting docs
(AML Documents including; Wolfsberg Questionnaire, AML Controls, Bank Licenses, US Patriot Act Certificates, Annual Reports …)
• Continuously validated content
– Fact-based, documented and transparent controls, change driven
• A secure and trusted data exchange platform
– Banks submit, maintain and selectively exchange data through the platform
Identify areas of risk and demonstrate your declared behaviour: the SWIFT Profile
Sanctions Screening
250+ users
90+ countries
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Introducing a new Sanctions Screening option
Jan
2015
Your institution Your correspondent
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Based on Copy
Based on Connector
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
Sanctions compliance – balancing priorities
with
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
Compliance Analytics
Introducing Compliance Analytics Leveraging SWIFT traffic data for risk monitoring
Single Source
Identify
Global aggregated
views
Quantify Benchmark vs totals & peers
Monitor
Event driven Alerting
Drive
Focus on high risk
Investigate
Visual analytics
Report
Interactive generation
Look back
Retrospective reviews
Typical areas where Compliance Analytics will bring value
• 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