SWIFT in Compliance Sanctions – AML

24x7 – Highly Resillient – Secure - Transparent

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17. June 2014

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Community Solutions For Community Challenges

Financial crime is top of

the agenda for banks

Financial crime is top of

the agenda for banks

Significant costs

at stake….

Significant costs

at stake….

All geographies / All types

of players impacted

All geographies / All types

of players impacted

... Yet no competitive

advantage for banks

... Yet no competitive

advantage for banks

Lots of duplication…

… for universal challenges

Lots of duplication…

… for universal challenges

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)

Financial Crime Compliance Roadmap Live Development Qualification Exploration

Quality

Assurance

Client/Name screening

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A hosted platform service

Sanctions Screening

Regulatory scrutiny and enforcement

of sanctions policies is increasing

Available screening solutions

complex and costly to maintain

Operational challenge for financial

institutions

Context around Sanctions screening

SWIFT

Sanctions

Screening

service

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• Screening engine & user interface

• Centrally hosted and operated by SWIFT

• No local software installation & integration

• Real-time

• Sanctions List update service

• Screening engine & user interface

• Centrally hosted and operated by SWIFT

• No local software installation & integration

• Real-time

• Sanctions List update service

Sanctions screening over SWIFT

Your institution

Your correspondents

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Screening engine Sanctions Portal

SWIFT Network

FINcopy

Transaction is

copied

Decision to deliver (no hit / false positive)

or abort transaction (true hit)

Transaction abort notification (true hit)

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5

Service

user

Sending institution

Managed by SWIFT

Service overview – as a sender

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Outgoing transaction

1

3

2 4

Transaction is delivered

as-is (no hit or false positive)

Receiving

institution

Service overview – as a receiver

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Service

user

Transaction is

copied

Transaction is delivered

as-is (no hit or false positive)

Instruction to deliver

transaction

Transaction is delivered

flagged (true hit)

2 4

Outgoing transaction

1

Sending institution

1

1

Receiving

institution

Screening engine Sanctions Portal

Managed by SWIFT

SWIFT Network

FINcopy

Public, Private & Good Guys Lists

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Public Lists

29 Public Sanctions

lists supported

Private List

Good Guys List

• AU – Australia Department of Foreign Affairs and Trade

• AU - DFAT Countries Embargoes

• AU - DFAT Iran Specified Entities List

• CA – Canada Foreign Affairs and International Trade

• CA - FAIT Countries Embargoes

• CA - Office of the Superintendent of Financial Institutions

• CA - OSFI - United Nations Act Sanctions

• CN - People's Republic of China - Ministry of Public Security

• EU - EUROPE Countries Embargoes

• EU - European Official Journal

• FR - Journal Officiel français

• HK - Hong Kong Monetary Authority

• HK - HKMA Countries Embargoes

• JP - Ministry of Finance

• NL - Frozen Assets List - Dutch Government

• NZ - New Zealand Police

• SG - Singapore MAS - Investor Alert List

• CH - Switzerland Secrétariat d’Etat à l’Economie

• CH - SECO Countries Embargoes

• UK - Her Majestys 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 - Financial Crimes Enforcement Network

• US - OFAC Countries Embargoes

16 June 2014

199 contracts

83 countries

Expand the Functionality

• SWIFT FIN Securities (Cat 5)

• SWIFT FIN Treasury (Cat 3)

• SEPA

• EBICS

• And Others…

Provide a Full Offering

• A Complementary Product

• Screen Your Customer Data base

– Sanctions Lists

– PEP Lists

– Private and Other Lists

Screening of

Any Format

(SAF)

SWIFT’s Sanctions Screening – Future Updates

Customer

Screening

Expand

Functionality

& Capability

Optimize your filter for

effectiveness and efficiency

Sanctions Testing

In a world of unprecedented complexity

and change:

• How can I ensure my screening solution works?

• How can I demonstrate I understand my solution and how it

mitigates risks?

• How can I make my screening solution more effective – and

more efficient?

Banks face a sanctions compliance

challenge

Effectiveness

• Provide assurance that your

system 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

Testing Meeting regulatory demands

Tuning Managing cost and resources

Sanctions compliance – balancing

priorities

with

• Outdated lists

• Missing entry types

• Missing entries

• Language variants not screened correctly

• Deleted records still screened

• List scope

• incorrect or not aligned with bank policy

• Inconsistent implementation across filters

• Entity and alias types screened unnecessarily

• Inconsistent screening performance across message types

• Message or file elements not screened properly

• Overreliance on specific fields (e.g. address or country)

• Poor fuzzy matching performance

• Line break, word order, sequences

• Poor performance against particular entries (short or long names, aliases)

• Character set matching issues

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Issues identified through testing

Sanctions Lists Quality

Screening Policy

Message Types

Filter Weakness

Formats

Settings

Lists

Automate • Repeat • Compare • Monitor

Sanctions testing process

Define test objective

Download test objective

Process test files

Upload hit results

View test results

The one-off assessment report

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This report offers a

One-off Assessment of an

Institution’s Sanctions Environment.

It serves both

Regulatory & Internal Audit purposes.

Several predefined tests are executed

and the bank gets a report with

Test results, Observations and Recommendations.

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The one-off assessment report portfolio

Audit ASSESSMENT Evaluation ASSESSMENT

Scope&

Purpose

Deliverables

• Constrained Audit

• Internal & external

regulatory purposes

Formal Report

• Comments and

Explanations

• Evaluation of filter

performance

• Identification of areas

for improvement

Formal Report

• Findings,

Recommendations

& Remediation plan