Banks Endorse Measures to Enhance Transparency in International Payments

2007-04-19 20:33 1050

NEW YORK, April 19 /Xinhua-PRNewswire/ -- The Wolfsberg Group and The Clearing House Association L.L.C. today issued a statement endorsing measures to enhance the transparency of international wire transfers to promote the effectiveness of global anti-money laundering and anti-terrorist financing programs. The measures include both the development of an enhanced payment message format, which would include more detailed information about those conducting wire transfers in certain instances, as well as calling for the global adoption of basic messaging principles aimed at promoting good practice with respect to the payment system.

Over the last 30 years, the world's banks have developed an efficient and effective international payment system. The smooth functioning of this system is vital to global financial stability. The steps outlined above will both better protect the integrity of the system and help ensure its continued efficient functioning.

With the support of the global regulatory community and subject to acceptance by the membership of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the co-operative supplying secure standardized messaging services and interface software, it is anticipated that an enhanced payment message format will be developed.

The statement, including the messaging principles, is included below.

Members of the Wolfsberg Group are ABN AMRO, Banco Santander Central Hispano, Bank of Tokyo - Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Societe Generale, and UBS.

Members of The Clearing House Association L.L.C. are Bank of America, National Association; The Bank of New York; Citibank, N.A.; Deutsche Bank Trust Company Americas; HSBC Bank USA, National Association; JPMorgan Chase Bank, National Association; LaSalle Bank, National Association; UBS AG; U.S. Bank National Association; Wachovia Bank, National Association; and Wells Fargo Bank, National Association.

Statement on Payment Message Standards

We endorse the following actions to enhance transparency regarding parties to transactions in international payments. These actions will promote the effectiveness of risk-based programs designed to reduce vulnerabilities associated with financial intermediation and enable banks to avoid the use of their facilities by individuals and organizations that the banks would not accept as their own customers, including, most particularly, those engaged in money laundering, terrorist financing or transactions in violation of relevant sanctions.

These actions are: (i) the creation of a new or enhanced SWIFT payment message format for third-party cover payments that enables information regarding the originator and the beneficiary to be included; and (ii) the adoption of certain basic payment message standards within the banking industry.

With the support of the global regulatory community, and assuming acceptance by the SWIFT membership, it is anticipated that an appropriate message format change could be implemented as early as November 2008.

The four payment message standards that should be observed by all financial institutions are:

-- Financial institutions should not omit, delete or alter information

in payment messages or orders for the purpose of avoiding detection

of that information by any other financial institution in the

payment process.

-- Financial institutions should not use any particular payment message

for the purpose of avoiding detection of information by any other

financial institution in the payment process.

-- Subject to all applicable laws, financial institutions should

cooperate as fully as practicable with other financial institutions

in the payment process when requested to provide information about

the parties involved.

-- Financial institutions should strongly encourage their correspondent

banks to observe these principles.

The major financial institutions that have developed and will observe these standards will also strongly encourage their correspondent banks to observe them. To be successful, however, this initiative must necessarily involve the public and private sectors. The effectiveness of these standards requires adherence by the financial institutions originating payment messages and encouragement of their adherence by their regulators.

Source: The Clearing House