Risk Assessment & Management Flashcards
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Read the first 7 Risk Assessment & Management flashcards as text
Which SWIFT service allows banks to confirm whether a beneficiary account is active and matches the expected name before sending a payment?
Answer: Pre-validation
Pre-validation lets sending banks verify account details before initiating a payment, reducing failed transactions and fraud risk.
Under the SWIFT Customer Security Programme (CSP), what happens if a member institution fails its mandatory attestation?
Answer: Supervisory reporting and possible access restrictions
Non-attesting institutions face supervisory notification and may have access controls applied, though not automatic disconnection.
A bank receives an MT 199 free-format message requesting an urgent wire. Which risk is most prominent in this scenario?
Answer: Social engineering / BEC fraud
Free-format messages are commonly exploited in business email compromise and social engineering schemes to initiate unauthorized transfers.
What is the primary purpose of SWIFT's Mandatory Customer Security Controls (MCSCs)?
Answer: Establish a baseline of cybersecurity controls all users must implement
MCSCs define the minimum cybersecurity baseline every SWIFT user must implement and attest to annually under the CSP.
Which risk category best describes the exposure a bank faces when a correspondent bank in a foreign country fails due to sovereign default?
Answer: Country/sovereign risk
Country or sovereign risk arises when a foreign government's actions or default impair the ability of counterparties in that jurisdiction to fulfill obligations.
In SWIFT messaging, what control helps detect whether an MT 103 payment instruction has been tampered with in transit?
Answer: LAU (Local Authentication)
LAU (Local Authentication) applies a cryptographic signature to outbound messages, allowing the receiver to verify integrity and authenticity.
A compliance officer discovers that a counterparty bank has been removed from the SWIFT network. What is the most immediate operational risk?
Answer: In-flight payments may fail to settle, creating pending liabilities
When a bank is disconnected, messages in transit may not be delivered, leaving funds in an unresolved state and creating settlement exposure.
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