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Swift announces new regtech solution to combat fraud

Global / 12-04-17 / by
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Swift regtech technology cyber security

Swift is developing a new payment screening solution to enable smaller banks to automatically detect unusual or suspicious payments, helping them better prevent fraud and cybercrime.

The new real-time payments controls service will enable Swift’s customers to screen their payments according to chosen parameters defined by the bank’s own risk and compliance policies.

The solution can then ‘red flag’ out-of-policy payments or suspicious activity – this could include detecting payments made to new beneficiaries or outside of business hours, or an unusual combination of currencies and countries.

It is the latest solution in Swifts customer security programme (CSP) launched in May last year.

Swift says the service will significantly enhance risk management in cross-border payments, and help banks meet regulatory requirements, including sanctions, know your customer (KYC) and anti-money laundering (AML) regulations.

“It will give them a completely independent secondary control that will allow them to have confidence in the payment instructions that they are sending to other institutions,” Tony Wicks, head of AML incentives at Swift, tells GTR.

Using machine learning techniques, the service will also better understand a bank’s own transactions patterns over time.

“The solution will learn each participating institution’s pattern of behaviour,” Wicks says. “Over a period of time, the system will increase its knowledge of the institution’s messaging characteristics, thereby improving the levels of decisions that it can make.”

If a suspicious or unusual activity is identified, the service will generate a real-time alert that will then be investigated by the institution, which ultimately decides whether the payment should be aborted or released.

Going live in 2018, the service will initially be targeted at smaller financial institutions, as these are in the biggest need of updated regulatory technology (also known as regtech) and can especially benefit from the economies of scale that the service provides, Wicks explains.

“The smaller institutions are not currently well-served by other vendors in this space. The time to deploy full prevention solutions is very high, and the cost and management of those solutions are also very high and need a level of expertise that may not be present within those institutions,” he says.

Being launched as a hosted utility solution, Wicks describes it as a “switch on service” where users can access it instantly with no hardware or software installation or maintenance, something that will help smaller banks get more quickly up to date with their technology.

“There is a level of agility associated with smaller institutions that also shouldn’t be underestimated, that allows them to adopt newer styles of solutions more quickly than some of the largest institutions,” he says.

The solution is based on the same capabilities as Swift’s sanctions screening service, which was introduced in 2012 as the first offering in its financial crime compliance portfolio, and to which over 600 institutions are subscribed today.

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