GCI Insights - October 2022
Global Compliance Institute
Global Compliance Institute (GCI) is an International Financial Crime Prevention and Compliance Training Institute.
Are Sanction Specialists ready to begin screening MX messages in November 2022?
by The Global Compliance Institute
THE MOVE FROM MT TO MX
The structure of an MT or the conventional SWIFT messages is already a well-known format for all financial institution that use SWIFT. It has a fixed set of fields where all institutions can figure out what each field of the message represents in the payment, such as "Field 50" for the applicant's information.
However, the current MT format has many drawbacks in terms of the parties involved in the payment and the purpose of payment, which would affect sanctions due diligence and the quality of the alerts generated by Name screening systems.
What exactly is an MX Format ?
The MX is the new format that SWIFT members should be using to exchange payment messages; this new format is an XML following the ISO standard 20022. According to SWIFT, members should go live on ISO 20022 for cross-border payments and reporting (CBPR+) and the start of the co-existence period in November 2022.
ISO 20022 messages
ISO 20022 is a multi-part International Standard, A single standardization approach (methodology, process, repository) to be used by all financial standards initiatives. ISO 20022 is designed to simplify global business communication by offering a global dictionary of a common language that everyone can understand. (ISO)
XML
MX is an Extensible Markup Language (XML) which is a text-encoding system and file format for storing, transmitting, and reconstructing arbitrary data. It defines a set of rules for encoding documents in a format that is both human-readable and machine-readable. (Wikipedia)
When will the MT format no longer be available?
Starting November 2022:
Will the MX replace all MT types?
MX elements valid for sanctions screening
One of the most effective methods that sanctions specialists would employ is to ensure that only relevant fields (Elements in the MX) are screened and that the screening is limited to relevant sanctions target categories (BIC, Person, Address).
As for the cover payment pacs.009.001.10 (COV) FinancialInstitutionCreditTransfer, the information of the underlying transfer are contained and the same details are subject to screening as above.
The following is an example of an MX message describing the elements and validity for sanctions screening:
Message Identifier:
pacs.008.001.10 FIToFICustomerCreditTransfer.
As for the cover payment pacs.009.001.10 (COV)
FinancialInstitutionCreditTransfer, the information of the underlying transfer are contained and the same details are subject to screening as above.
KEY TAKEAWAYS
Sanctions specialists should keep abreast of the developments of payment systems and how that could affect the sanctions screening process.
Complete payment information and a more structured format of payment systems will help enhance the due diligence procedures and the screening process.
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Senior AML & FCP Correspondent Banking Analyst at SEB Group
2yIt would be also beneficial to have a mandatory note/information in f70/72 about plausible contractor/final bene or other entity associated with a such settlement/agreement/shares or a brokerage plausible re-export nature.