NICE Actimize: Are financial institutions payment screening processes prepared for the SWIFT switch?

FAST (Society for Worldwide Interbank Financial Telecommunication) is in the process of transitioning from its current MT messaging standard to an MX standard conforming to ISO 20022 based on XML. But what does this mean for financial institutions and are they ready to change payment screening processes?

Ted sausen is the Director – AML Subject Matter Expert, at NICE Actimize explains why this transformation is a good thing. NICE Actimize is a provider of financial crime, risk and compliance solutions for regional and global financial institutions, as well as government regulators. The company offers real-time cross-channel fraud prevention, money laundering detection and transaction monitoring solutions that address issues such as payment fraud, cybercrime, sanctions monitoring, market abuse, customer due diligence and insider trading.

Drawing on his many years of experience in the compliance field, Sausen said Fintech time that 80% of high value payments by volume and 87% by value will have migrated to ISO 20022 by 2023. Therefore, payment companies must adapt to take full advantage of the change:

Ted Sausen, Director – AML Subject Matter Expert, at NICE Actimize

Are financial institutions considering a strategic change to their risk screening strategy this coming year? The upcoming standardization changes implemented by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) strongly bode well that current risk screening formats may require adjustments to remain compliant and that these processes could certainly be under review. meticulous.

As of November 2022, SWIFT is switching from its current MT messaging standard to an MX standard compliant with the XML-based ISO 20022 standard. This means that financial institutions need to start reviewing their existing risk screening solutions to ensure that they are ready for these types of messages and will be able to maximize the benefits that the new changes offer. The benefits of ISO 20022 include richer, better structured data and less free-form text; more transparency and information on customers reducing friction with customers; operational efficiencies through improved analytics; and improved direct processing.

Capitalizing on ISO 20022 standards, the upcoming ISO-compliant SWIFT standard for electronic data exchange between financial institutions plans to strengthen financial crime prevention by clearly indicating and simplifying the extraction of rich data from payment messages and improving AML compliance through transaction filtering. Better data gives better results. This adjustment establishes an industry-wide language and standard message format that makes transaction information uniform in structure and transparent in meaning while unifying existing standards by ensuring interoperability between messaging standards. .

What benefits will the new SWIFT MX transformation offer to financial institutions? First, the new SWIFT MX messages allow financial institutions to take advantage of the uniform message structure to enhance understanding and consistency of incoming payments, dramatically improving money laundering control and detection. Second, the process also helps organizations deliver a better customer experience by identifying and filtering out any unnecessary or meaningless information that could lead to false positive alerts and stoppage of payments.

Currently, more than 10,000 financial institutions around the world use the current SWIFT MT message standard. However, by the end of 2025, the MT messaging standard will be withdrawn and replaced with an MX message standard that conforms to ISO 20022. SWIFT estimates that 80% of high value payments by volume and 87% by value will have migrated to ISO 20022 by 2023. Therefore, financial institutions should ensure that their payment screening technology will take full advantage of SWIFT MT and ISO. 20022 compliant MX transaction message standards to quickly filter transactions and optionally block payments in real time.

Additionally, new self-service screening solutions provide a highly configurable approach to monitor payments for financial crime and penalty risks. As part of any transformation process, financial institutions should implement and establish scalability options and self-managed settings that allow for easy adoption of new configurations as transaction types diversify and ISO 20022 evolved.

As a financial institution evolves to comply with the new standard, it must also seek to establish greater control and adopt technology that increases the speed and accuracy of payment control. By maintaining a sanctions screening strategy that evolves with the business and as the volumes and types of payments increase, the financial institution can face the complexities of payment screening scenarios with more confidence.

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