Changes in SWIFT message standards

Society for Worldwide Interbank Financial Telecommunication or SWIFT operates a worldwide financial messaging network to exchange messages between banks and other financial institutions. Every year in the month of November it upgrades the ‘Message Standards’ to include the latest changes in the domain. This year the changes have been mainly in payments messages. Apart from that a few minor amendments were made to streamline the standards portfolio. The SWIFT Board of Directors reduced the scope of the release keeping in mind the global financial crisis and to minimize the burden on Swift Users.

The changes introduced by SWIFT in the payment messages categories are in :

• 1 – Customer Transfer messages
• 2 – Financial Institution Transfers, and
• 9 – Special Messages

This is due to the regulatory requirements of Anti-money Laundering (AML) and the need to have full transparency on payment originators and cover payments, in the fight against funding of terrorism.

The following important changes have been made in payment messages:

• Additional validation has been applied to field 50F – Ordering Customer in Message Types.
  
  101 – Request for transfer
  102 – Multiple Customer Credit Transfer
  102+ Multiple Customer Credit Transfer - STP
  103 – Single customer Credit Transfer
  103+ Single Customer Credit Transfer - STP
  210 – Notice To Receive, and
  910 – Confirmation of Credit
  
  After these changes messages will be NAKKed if use of this field is non compliant to the existing rules. It will further reduce manual repairs & queries and will improve straight-through processing (STP).
  
• The new general use messages MT 202 COV (General Financial Institution Transfer - Cover) and MT 205 COV (Financial Institution Transfer Execution – Cover) are introduced. In these messages it will be mandatory to include a copy of selected fields from the underlying customer credit transfer sent by cover method. This will allow correspondents involved in processing the transaction to screen payments in line with AML regulations.
  
• MAC (Message Authentication Code) and PAC (Proprietary Authentication Code) trailers are no longer allowed in block 5 of the message.
  
• Where IBAN (International Bank Account Number) validation occurs in MTs 102+ (Multiple Customer Credit transfer – STP) and 103+ (Single Customer Credit Transfer – STP) the country code in the IBAN must be in upper case.

The following messages have been removed from the standards due to non-usage for some years.

• MT 106 - EDIFACT Envelope (Max 9600 Characters)
• MT 121 - MT 121 Multiple Interbank Funds Transfer (EDIFACT FINPAY Message)
• MT 206 - Cheque Truncation Message

The BKE (Bilateral Key Exchange) messages from MT 960 to 967 have been deleted from the system as it has become redundant with the cross over to RMA (Relationship Management Application).

• MT 960 Request for Service Initiation Message
• MT 961 Initiation Response Message
• MT 962 Key Service Message
• MT 963 Key Acknowledgement Message
• MT 964 Error Message
• MT 965 Error in Key Service Message
• MT 966 Discontinue Service Message
• MT 967 Discontinuation Acknowledgement Message

SWIFT has also decided that they will delete the following message categories in the next upgrade.

• 3 - Foreign exchange and Loan / deposit transactions
• 4 – Collections5 – Securities
• 6 – Metals
• 7 -Documentary Credits
• 8 – Travellers Cheques
• N - Common Group

The detailed documentation of the changes can be found in the Standards Release Guide and Message Format Validation Rules.

Contributed By:
Mr. K.R.S. Mani