View
255
Download
2
Category
Preview:
DESCRIPTION
Work Session - Compliance Roadmap and Solutions
Citation preview
SWIFT Financial Crime Compliance Initiatives
SWIFT Business Forum, Canada
April 2014
2
Financial crime is top of
the agenda for banks
Significant costs
at stake….
... Yet no competitive
advantage for banks
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
A community issue calling for a community
solution …
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
3
KYC Registry on the 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
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
4
More on SWIFT Sanctions Screening
service
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Your institution
• Best-in-class Screening engine & user interface
• Centrally hosted and operated by SWIFT
• No local software installation & integration
• Real-time screening of FIN messages
• Sanctions List update service
Sanctions Screening service
Your correspondents
5 SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
• NZ - New Zealand Police
• SG - Singapore MAS - Investor Alert List
• CH - Secrétariat d’Etat à l’Economie
• CH - SECO Countries Embargoes
• UK - Her Majesty’s Treasury
• UK - HMT Countries Embargoes
• UN - United Nations
• UN - UN Countries Embargoes
• US - Office of Foreign Assets Control SDN list
• US - OFAC Palestinian Legislative Council
• US - OFAC Part 561 list
• US - OFAC Foreign Sanctions Evaders
• US - OFAC Countries Embargoes
• US - Financial Crimes Enforcement Network
29 public lists supported – and counting
6
• AU – Department of Foreign Affairs and Trade
• AU - DFAT Countries Embargoes
• AU - DFAT Iran Specified Entities List
• CA –Foreign Affairs and International Trade
• CA - FAIT Countries Embargoes
• CA - Office of the Superintendent of Financial Institutions
• CA - OSFI - United Nations Act Sanctions
• CN - Ministry of Public Security
• EU - European Official Journal
• EU - Countries Embargoes
• FR - Journal Officiel français
• HK - Hong Kong Monetary Authority
• HK - HKMA Countries Embargoes
• JP - Ministry of Finance
• NL - Frozen Assets List - Dutch Government
Customers can
add private lists
3 new lists
since January SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Sanctions Screening - headlines
7 SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
168
customers
in 74
countries
Strong roadmap to
develop current service
• Adding more lists to
support local needs
• Support of any formats
(ISO20022, MX, SEPA,
domestic, proprietary,..)
• Fine-tuning rules to
optimise hit rate aligned
with your risk appetite
Expanding the screening
portfolio
• Customer screening
service for client data
against Sanctions, PEP,
Negative media,…
• Sanctions Lifeline as a
disaster recovery
service for your current
screening infrastructure
8
More on SWIFT Sanctions Testing
service
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
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
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 9
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
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 10
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
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 11
• Testing
• Defined tests
• 2 systems
• Monthly tests
• App + report
Sanctions Testing
STANDARD
Analyse &
Compare
Regular
Audit Points
• Testing
• Defined tests
• 2 systems
• One-off
• Report
Sanctions Testing
ASSESSMENT
Single
Audit Point
Sanctions Testing Portfolio
• Testing +Tuning
• Custom tests
• Group license
• Unlimited use
• App + report
Functions
Flexibility
Scope
Frequency
Deliverables
Sanctions Testing
ENTERPRISE
On-Going
Testing &
Tuning
12
Sanctions Testing Portfolio
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Sanctions List Monitor
• Free service to SWIFT institutions
– Launched Jan 2014
• Register to receive email alerts for
monitored regulatory lists
– Alerts are sent in a common
format irrespective of source
– List change impacts can be
understood
– Alerts are timely and often ahead
of regulatory announcements
– A valuable secondary source to
verify list updates and changes
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 13
14
More on Compliance Analytics
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Introducing Compliance Analytics Leveraging SWIFT traffic data for risk monitoring
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 15
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
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 16
• 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
17
Leveraging country of origin and beneficiary country to provide additional insights
CA UK
CH
YE
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
MT103: field 52A MT202: field 52A
MT103: field 57A MT202: field 58A
BIC code
BIC code
Example 1 : Country risk assessment– Mauritania What business do I have with Mauritania on a global basis?
Data Sources All figures based on Inbound payments (MT103 & MT202cov)
from correspondents in Mauritania – Full Year 2013
1. Geographical distribution of Demo Bank branches/affiliates,
based on value of inbound traffic. Payments with 4 Demo
bank affiliates in 4 countries
2. Top20 Ultimate beneficiary countries (field 57a), based on
value of inbound traffic: Top 20 out of 100 countries overall
3. Sanctioned country as ultimate beneficiary, based on value of
inbound traffic. Example has one payment sent by Bank X in
Mauritania, via Demo Bank, with Cuba as ultimate beneficiary
country
Value distribution
2. Ultimate beneficiary countries – Top 20 3. Do any flows end up in a Sanctioned country?
1. How many of my branch / affiliates receive payments from Mauritania?
4 branches in 4
countries
Correspondent CORSMRMR in
Mauritania has sent me one payment
in USD that ends up in Cuba
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 18
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 19
Example 2: 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?
Example 3: Monitor correspondent relationships at group
level Active / Dormant / Unused RMAs
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 20
1. RMAs opened in 2012 and status
(active, dormant, unused)
2. Geographical distribution
of new inbound
relationships
3. Are these relationships in
high risk jurisdictions as per
FATF classification?
Example 4: Value range distribution by correspondent
Is value distribution in line with anticipated behaviour?
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 21
Bank 1
Bank 2
Bank 3
Bank 4
Bank 5
Bank 6
Bank 7
1. What is the value
distribution from my
correspondents in Nigeria?
2. How has it evolved over
time?
22
More on SWIFT KYC Registry initiative
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
The Context An unprecedented challenge to comply with KYC legal requirements
23
SWIFT
KYC
Registry
Complex and
inconsistent requirements
across jurisdictions
Cumbersome, repetitive
and inefficient bilateral
exchanges
Unavailability and poor
quality of information
Complex and
inconsistent requirements
across jurisdictions
Cumbersome, repetitive
and inefficient bilateral
exchanges
Unavailability and poor
quality of information
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
SWIFT KYC Registry in a nutshell Your single source of correspondent banking KYC information
Industry-owned
Well established, neutral partner renowned for driving standardised,
industry-wide solutions
SWIFT
KYC
Registry
Collaborative & user-controlled
Banks submit, maintain and selectively exchange data through the platform
Unique value-add
SWIFT Profile increases transparency through unique, factual traffic
activity report
Complete & up-to-date
SWIFT continuously verifies and validates the
quality of the data
24
Global
Reach of 7000+ banks active in correspondent
banking, representing over 1 million relationships
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Collection of data and documents • Structured data
• Supporting documents
• Maintenance
• Archiving and versioning
Controls • Completeness, validity, accuracy
Reporting and monitoring • Platform activity reporting and practices
• Audit trail
• Notifications of changes
Value added services • SWIFT profile
25
I
n s
co
pe
Ou
t of scop
e
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Name screening • List screening (PEP, blacklist checking)
• Alert management or bad press
Risk scoring • SWIFT proposed risk score
• Communication on (non)-accepted counterparties
Due Diligence • Around intermediaries
Regulatory watch and market practices
• Monitoring of legal/regulatory updates
What will the SWIFT KYC Registry be in its first phase
26 SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Registry Content Structure
Entity summary
I. Identification of the Customer
II. Ownership and Management Structure
III. Type of Business and Client Base
IV. Compliance Information
V. Tax Information
• e.g. Legal and Business Name, Registered Address, BIC Code
• e.g. Banking License, Certificate of Incorporation
• e.g. Form of Organisation, Beneficial Owners
• e.g. Targeted Customers, Geographical Markets
• e.g. USA Patriot Act Certification, Wolfsberg Questionnaire
• e.g. FATCA status
PU
BL
IC
ON
RE
QU
ES
T
27 SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
SWIFT Profile A new way to bring more transparency on your correspondents’ activities
• Objective and factual, initially based on FIN traffic
• Helps validate declared behaviour
• Substantiates risk rating process
• Different levels of granularity up to the level of
nested correspondents
• Optional and shared at bank’s discretion
• Specific, transparent and unambiguous
• Does not contain competitive information
SW
IFT
Pro
file
28
January ’14
• Formal announcement of the KYC Registry initiative
• Start of KYC Working Group & data contribution
September ’14
• Open the Registry for data contribution by a number of selected banks
December ’14
• Open the Registry for data contribution and consultation by all banks
• Commercial launch of the Registry
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Timeline The journey starts today
Bootstrap Controlled ramp-up
General availability
29 SWIFT Canadian Business Forum – 2014 – Confidentiality: Public
Please provide us with your feedback!
• Kindly complete the survey form and submit upon exiting
What’s next on the agenda?
• Beyond GDP – What is real wealth?
4:00-4:45pm
Plenary Room
Thank you
SWIFT Canadian Business Forum – 2014 – Confidentiality: Public 32
Recommended