16 March 2018

Financial crime poses significant challenges for securities market participants

Estimating industry leaders collaborate to help ease financial crime compliance concerns for cross-border securities accounts

Financial crime compliance has been a top priority for regulators and financial institutions for years, but with a strong focus on cross-border payments, leaving cross-border securities accounts open for interpretation. The international system under which securities are safe kept and settled crosses many institutions, changing ownership interests multiple times, which increases the potential for fraudulent behaviour.

Financial Crime Estimating

Recently, the International Estimating Services Association (ISSA), which includes SWIFT and several securities institutions and market infrastructures, paved the way for securities market participants to better control the risks associated with financial crime. The securities servicers association collaborated to develop several major principles that provide a clear global standard for the creation and maintenance of cross-border securities account relationships. Specifically, the principles offer practical guidelines for custodians to best manage the risks that arise from the layers of intermediation between securities issuers and ultimate beneficial owners. These risks include money laundering, terrorist financing, market abuse, corruption, fraud and the evasion of sanctions.

“In order to meet these compliance requirements, custodians and broker/dealers need to understand the entities and beneficial owners involved in securities transactions, and have key controls at the due diligence stage,” says Paul Taylor, Head of Financial Crime Compliance Initiatives at SWIFT.  “SWIFT can help and in fact, our Name Screening Batch service enables custodians and broker/dealers to check their customer or provider databases against the relevant lists, and our KYC registry can help capture key due diligence information demanded within these principles.”

In order to meet these compliance requirements, custodians and broker/dealers need to understand the entities and beneficial owners involved in securities transactions, and have key controls at the due diligence stage.

Paul Taylor, Head of Financial Crime Compliance Initiatives, SWIFT

Name Screening is a SWIFT-hosted solution which provides customer and vendor screening against lists of sanctioned organisations and individuals, Politically Exposed Persons (PEPs), and Relatives and Close Associates (RCAs).  The service is provided on a usage-based subscription fee, with no need for expensive hardware or software. The service sources public sanctions lists directly from the authorities, while industry leader Dow Jones provides PEP, RCA and Sanctions Ownership Research lists. Users can also upload their own private lists.

The KYC registry is a global KYC utility used by more than 4,500 correspondent banks and funds players in over 200 countries and territories, representing 75 percent of SWIFT message traffic. Developed to enable the sharing of due diligence data and documents between parties, it is in full alignment with the new Wolfsberg Due Diligence Questionnaire (DDQ) and contains the Estimating Custody DDQ, developed collaboratively by ISSA participants.

These two solutions are part of an ever evolving set of capabilities developed at SWIFT to help its members combat financial crime “Advanced technology, collaboratively built and cost effective solutions, with world-class security make SWIFT’s products the future-proofed answer to the challenges posed by constantly evolving financial crime demands”, concludes Taylor.

Name Screening factsheet

PDF iconDownload (159.75 KB)
Last update: 
21 September 2017

Fast, accurate screening of customer and supplier names

  • Collateral
  • Factsheets
English

 

Infographic

Ten sources of risk in the global custody chain

Extended reading

Need

We help custodians adapt and succeed in a challenging market

Automate your business flows and leverage our community of market participants to reach new clients and markets

Factsheets

Name Screening factsheet

Fast, accurate screening of customer and supplier names

PDF icon Download (159.75 KB)
English
Compliance

The KYC Registry

The KYC Registry lets financial institutions exchange KYC information simply and securely, increasing transparency while eliminating costly and redundant document exchanges.

SWIFT Insights

  • Discover the latest trends in financial services
  • Keep up with our news updates
  • Read thought-provoking industry reports
  • Explore global events and webinars
Read more