The financial messaging cooperative is widening its anti-crime offerings while Broadridge finishes a key pilot project.
SWIFT has expanded its financial crime-fighting services while Broadridge Financial Services has just completed a key blockchain/distributed ledger technology (DLT) pilot — news that broke at SWIFT’s SIBOS industry conference in Toronto this week.
In an effort to help small financial services firms and institutions fight financial crime in emerging markets, SWIFT is launching a service that screens customer databases against global sanctions and Politically Exposed Persons (PEP) lists, officials say.
The “Name Screening” capability is an extension of SWIFT’s transaction review solution, Sanctions Screening, used by more than 750 financial institutions and corporates worldwide, SWIFT officials say.
The new Name Screening is hosted and managed by SWIFT, and “can easily be tailored to address local regulatory requirements and institutional risk policies,” according to SWIFT. The financial messaging cooperative “manages list updates as they occur … The service also supports simple, web-based screening of single names to support customer onboarding and due diligence activities.” The service offers workflow management and reporting to facilitate an audit trail.
While screening customer names is crucial to “compliance with sanctions, anti-money laundering (AML), and customer due diligence (CDD) requirements,” many firms in emerging markets “often lack the resources needed to operate and maintain the complex and expensive screening solutions installed at larger organizations,” according to SWIFT officials.
“SWIFT is committed to delivering solutions that support institutions of all sizes, regardless of location, in the fight against financial crime,” says Luc Meurant, head of financial crime compliance services at SWIFT in a prepared statement.
The Name Screening service is built upon SWIFT’s sanctions screening and testing capabilities, its partnership with Dow Jones, advanced technology, list data, and security support, officials say.
SWIFT’s Compliance Services unit offers financial crime compliance services in the areas of sanctions, know your customer (KYC) support, and AML requirements, officials say. The portfolio of services encompasses sanctions screening, sanctions testing and name screening solutions, compliance analytics and payments data quality services, and the KYC Registry.
Broadridge, Natixis & SocGen Apply DLT to Repos
Broadridge Financial Solutions, Natixis and Societe Generale have completed a blockchain/distributed ledger technology (DLT) pilot for bilateral, noncleared repurchase, or repo, agreements that could pave the way for fixed income participants to move away from transactions facilitated via phones, Bloomberg terminals and faxes.
Broadridge, which made the announcement at SIBOS, developed the application, provided infrastructure support, simulated the role of a custodian, and, overall, managed the process, Horacio Barakat, vice president of corporate strategy at Broadridge, tells FTF News.
Broadridge selected repo agreements because they are fairly simple compared to tri-party repos and seemed to be good fit for this kind of a pilot test, officials say.
“Within the bilateral repo market, blockchain has shown that it can play an instrumental role in reducing operational cost and complexity,” says Vijay Mayadas, president of global fixed income and analytics at Broadridge, in a prepared statement.
Natixis became involved to help advance repos processing via blockchain/DLT.
“Our participation in this pilot displays Natixis’ strong commitment to leverage new technologies, aimed at reducing risk and improving efficiencies in the financial markets,” says Kevin Alexander, head of global markets and investment banking, Americas, at Natixis, in a prepared statement.
The repo application pilot follows another recent DLT effort for which Broadridge, JPMorgan, Banco Santander, and Northern Trust supported a proof of concept implementation with “an issuer agent to enhance transparency in the proxy voting process,” officials say.
The repo pilot exploited DLT capabilities “to reduce operational risk for market participants by providing a secure record of repo trade details, reducing the need for reconciliation and removing obstacles to straight through processing,” Broadridge officials say. “This new blockchain-enabled solution, which automates end-to-end processes, streamlines the repo agreement and confirmation processes, offers a faster and more accurate collateral substitution process, while eliminating time consuming manual interventions, and reduces counterparty risk while increasing auditability.”
The next steps involve embedding the Broadridge software solution further into the bilateral repo process, including the back-end custodian and Fedwire services, Bakarat tells FTF News. “We think this is the natural next step,” he says. “We absolutely want this to be productized.”
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