Download - Larc2013 - Sanctions Compliance
Sanctions Compliance
John Taboada – SWIFT
Andrea Susana Jimenez –
Bancolombia
James Wills - SWIFT
How do you ensure
your screening
solution works ?
Can you make it
more Effective?
more Efficient?
Banks are facing a challenge
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 2
3 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
The challenge (and costs) keeps growing…
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 4
List Management Challenges
• a. Applying the correct list(s) to particular
customers/transactions in multiple jurisdictions
• b. Frequency of list updates
– i. In 2011, OFAC updated its programs, on average, every
4 days
– ii. In 2011, there were 10 instances where OFAC updated
multiple times intra-day (includes both list and program
changes)
– iii. Cascades of updates, for example, when OFAC additions
are picked up by HMT, then EU.
• c. Overall list volume (OFAC; for example, 5074
entities, 6878 aliases, and 8918 addresses)
5 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
List Content Challenges
• a. Indirect listings (or, listings that require the institution to do additional
research in order to implement)
– i. Listing of Tidewater required research into the specific ports which they
operated.
– ii. Listings that include “all other branches or offices worldwide”
– iii. Companies in which a listed entity has more than 50% interest.
– iv. Listed vessels changing names, countries of registration, ownership,
management
6 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
List Content Challenges • b. Inconsistent listings (across lists)
– i. There are 112 spelling variations in Muammar Kaddafi’s name in print media
– ii. The OFAC list provides 8 of them.
– iii. The UN sanction uses only 1 form of the name.
– iv. The form used in the UN sanction does not match any of the 8 in the OFAC listing.
7
Qaddafi, Muammar
Al-Gathafi, Muammar
al-Qadhafi, Muammar
Al Qathafi, Mu'ammar
Al Qathafi, Muammar
El Gaddafi, Moamar
El Kadhafi, Moammar
El Kazzafi, Moamer
El Qathafi, Mu'Ammar
Gadafi, Muammar
Gaddafi, Moamar
Gadhafi, Mo'ammar
Gathafi, Muammar
Ghadafi, Muammar
Ghaddafi, Muammar
Ghaddafy, Muammar
Gheddafi, Muammar
Gheddafi, Muhammar
Kadaffi, Momar
Kad'afi, Mu`amar al-
Kaddafi, Muamar
Kaddafi, Muammar
Kadhafi, Moammar
Kadhafi, Mouammar
Kazzafi, Moammar
Khadafy, Moammar
Khaddafi, Muammar
Moamar al-Gaddafi
Moamar el Gaddafi
Moamar El Kadhafi
Moamar Gaddafi
Moamer El Kazzafi
Mo'ammar el-Gadhafi
Moammar El Kadhafi
Mo'ammar Gadhafi
Moammar Kadhafi
Moammar Khadafy
Moammar Qudhafi
Mu`amar al-Kad'afi
Mu'amar al-Kadafi
Muamar Al-Kaddafi
Muamar Kaddafi
Muamer Gadafi
Muammar Al-Gathafi
Muammar al-Khaddafi
Mu'ammar al-Qadafi
Mu'ammar al-Qaddafi
Muammar al-Qadhafi
Mu'ammar al-Qadhdhafi
Mu`ammar al-Qadhdhāfī
Mu'ammar Al Qathafi
Muammar Al Qathafi
Muammar Gadafi
Muammar Gaddafi
Muammar Ghadafi
Muammar Ghaddafi
Muammar Ghaddafy
Muammar Gheddafi
Muammar Kaddafi
Muammar Khaddafi
Mu'ammar Qadafi
Muammar Qaddafi
Muammar Qadhafi
Mu'ammar Qadhdhafi
Muammar Quathafi
Mulazim Awwal Mu'ammar Muhammad
Abu Minyar al-Qadhafi
Qadafi, Mu'ammar
Qadhafi, Muammar
Qadhdhāfī, Mu`ammar
Qathafi, Mu'Ammar el
Quathafi, Muammar
Qudhafi, Moammar
Moamar AI Kadafi
Maummar Gaddafi
Moamar Gadhafi
Moamer Gaddafi
Moamer Kadhafi
Moamma Gaddafi
Moammar Gaddafi
Moammar Gadhafi
Moammar Ghadafi
Moammar Khadaffy
Moammar Khaddafi
Moammar el Gadhafi
Moammer Gaddafi
Mouammer al Gaddafi
Muamar Gaddafi
Muammar Al Ghaddafi
Muammar Al Qaddafi
Muammar Al Qaddafi
Muammar El Qaddafi
Muammar Gadaffi
Muammar Gadafy
Muammar Gaddhafi
Muammar Gadhafi
Muammar Ghadaffi
Muammar Qadthafi
Muammar al Gaddafi
Muammar el Gaddafy
Muammar el Gaddafi
Muammar el Qaddafi
Muammer Gadaffi
Muammer Gaddafi
Mummar Gaddafi
Omar Al Qathafi
Omar Mouammer Al Gaddafi
Omar Muammar Al Ghaddafi
Omar Muammar Al Qaddafi
Omar Muammar Al Qathafi
Omar Muammar Gaddafi
Omar Muammar Ghaddafi
Omar al Ghaddafi
SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Results Matrix
Critical Misses
Should Be
Missed
Should Be Hit
Wasted
Investigations
Test For Exact Matches Coverage of EU List Impact of Filter Threshold
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 8
List Content Challenges
9
Limited overlap among lists.
Graph courtesy of
Omnicision SWIFT Latin American Regional Conference - 2013 11-12 July 2013
10 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Context
• Regulatory scrutiny and
enforcement
of sanctions policies is increasing
• Available screening solutions
complex and costly to maintain
• Challenges for low-volume
financial institutions
SWIFT is
launching a
centralised
Sanctions
screening service
for low volume
clients
11 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Sanctions screening – Scope
Sanctions Screening over SWIFT is a Transaction screening service:
• FIN MT messages (CAT 1, 2, 4 and 7 at launch)
• Real time
SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Customer identification & verification
Initial due diligence
Customer screening
Ongoing due diligence
Customer & transaction monitoring
Transaction screening
start transacting
On-boarding process Ongoing reviews
12
Your institution
• A combination of best of breed:
– Filter application
– Sanctions List update service
• Centrally hosted and operated by SWIFT
• Real-time filtering service of FIN messages
• No local software installation & integration project
Sanctions screening service overview
Your correspondents
13 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Service overview - as sender
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 14
Service overview - as receiver
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 15
How does it work?
Configuration
Use
Configuration
Use
16 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Message type selection
• Incoming & outgoing flows selected by default, no possibility
to change
• All MT within a business area selected by default, possibility
to unselect MTs
Configuration
Use
17 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
User & workflow management
• Users authenticated via Secure Tokens
• Roles available:
– Administrator
– Compliance
– Level 1 user
– Level 2 user
• Choice of workflow
– Standard
– 4 eyes
Configuration
Use
18 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
List management
• Lists are centrally managed by SWIFT
• Quality assurance process
• Report on all changes for each update to lists
• Suggestions for good-guys
Sanctions Screening
Configuration
Use
19 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
Public lists supported
20
• AU - Australia Department of Foreign Affairs and Trade
• AU - DFAT Iran Specified Entities Lists
• AU - DFAT Countries Embargoes
• CA - FAIT Countries Embargoes
• CA - Canada Office of the Superintendent of Financial Institutions
• CA - Department of Foreign Affairs and Trade
• CA - OSFI - United Nations Act Sanctions
• EU - European Commission Official Journal
• EU - Europe Countries Embargoes
• FR - France Journal Officiel Français
• HK - Hong Kong Monetary Authority
• HK - HKMA Countries Embargoes
• JP - Japan Ministry of Finance
• NZ - New Zealand Police
• NL - Frozen Assets List - Dutch Government
• SG - Singapore Monetary Authority of Singapore
• CH - Switzerland Secrétariat d'Etat à l'Economie
• CH - SECO Countries Embargoes
• GB - United Kingdom Her Majesty Treasury
• GB - HMT Investment Ban list
• GB - HMT Countries Embargoes
• UN - United Nations
• UN - UN Countries Embargoes
• US - Office of Foreign Assets Control
• US - Specially Designated Nationals
• US - FinCEN
• US - Palestinian Legislative council
• US - US Countries Embargoes SWIFT Latin American Regional Conference - 2013 11-12 July 2013
How does it work?
Configuration
Use
Configuration
Use
21 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
notification
Your institution
Messages resulting in alerts
are temporarily held in the
filter and notified to the
bank for investigation
Your correspondents
The Level 1 user logs-in to the
Sanctions portal to review the
alerts
L1 user
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 22
Your institution
Your correspondents
The Level 1 user selects one
of the pending alerts to view
the details
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 23
Your institution
Your correspondents
Message content
Hits generated by
the message &
sanctions list
identifier
Sanctions list
record detail
Escalate to
Level 2
L2 user
Release the
message
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 24
Your institution
Your correspondents L2 user
Abort or Flag
the message Release the
message
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 25
Your institution
Your correspondents L2 user
abort notif.
When the user confirms a true hit on an outgoing message:
• The original message is aborted
• An abort notification (MT019) is sent to the user
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 26
Your institution
Your correspondents L2 user
When the user confirms a true hit on an incoming message:
• The original message is flagged…
• …then delivered to the recipient that routes it to a special queue
for appropriate processing
special queue
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 27
Reporting & Auditing
• Service provides:
– Monthly reporting of screening activity
– Audit trail of all message ID, decisions
– Audit trail of screening parameters
• SWIFT performs:
– Periodical independent reviews to ensure effectiveness
of the filter
28 SWIFT Latin American Regional Conference - 2013 11-12 July 2013
TCO
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 29
Weeks/
Months
Live in
days
Bancolombia
Andrea Susana Jimenez
A Case Study
Q&A
?
SWIFT Latin American Regional Conference - 2013 11-12 July 2013 31