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Swift Financial Crime Prevention & AML Flashcards

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Read the first 6 Swift Financial Crime Prevention & AML flashcards as text

  1. What is the primary AML concern with correspondent banking via SWIFT?

    Answer: Nested correspondent relationships can obscure the ultimate originator of funds

    Nested correspondent banking creates chains of banks where the originating customer is hidden, increasing money laundering risk.

  2. What does the FATF Recommendation 16 (the 'Travel Rule') require in SWIFT payments?

    Answer: Originator and beneficiary information must accompany wire transfers

    FATF Recommendation 16 requires that accurate originator and beneficiary information travel with wire transfers throughout the payment chain.

  3. In SWIFT MT103 messages, which fields carry the originator information required under the Travel Rule?

    Answer: Field 50 (Ordering Customer) and Field 52 (Ordering Institution)

    Fields 50 and 52 carry the ordering customer and institution details required to satisfy Travel Rule originator information requirements.

  4. What is 'KYC' in the context of SWIFT correspondent banking?

    Answer: Know Your Customer — due diligence on the identity and risk profile of banking clients and counterparties

    KYC (Know Your Customer) refers to due diligence processes banks use to verify identities and assess the money laundering risk of clients and correspondent banks.

  5. What is the KYC Registry operated by SWIFT?

    Answer: A centralized platform where financial institutions share standardized KYC documentation with correspondents

    The SWIFT KYC Registry allows banks to upload their KYC documentation once and share it securely with multiple correspondent banking partners.

  6. What does 'de-risking' mean in the correspondent banking context?

    Answer: Banks terminating correspondent relationships with high-risk jurisdictions or clients to avoid AML exposure

    De-risking occurs when banks exit correspondent banking relationships in high-risk regions to avoid regulatory penalties for AML failures.

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