Swift Regulatory Frameworks & Compliance 3

Question 1

What is the significance of SWIFT's ISO 20022 migration deadline for US financial institutions?

Accepted Answer

It requires adoption of a richer XML-based messaging standard replacing MT messages for cross-border payments

Answer

ISO 20022 replaces legacy MT message formats with structured XML data, enabling richer compliance and AML screening information.

Question 2

Which FATF recommendation specifically addresses correspondent banking relationships?

Accepted Answer

Recommendation 13

Answer

FATF Recommendation 13 requires financial institutions to apply due diligence measures to correspondent banking relationships.

Question 3

What is 'de-risking' in the context of SWIFT and correspondent banking?

Accepted Answer

Banks terminating relationships with entire categories of customers or regions to avoid AML risk

Answer

De-risking occurs when banks exit entire markets or customer segments to avoid regulatory risk, reducing financial inclusion globally.

Question 4

Under SWIFT's Payment Controls service, what type of real-time protection does it provide?

Accepted Answer

Detection and prevention of fraudulent or anomalous payment instructions before they are sent

Answer

SWIFT Payment Controls monitors outgoing SWIFT messages for anomalies and can block suspicious transactions before they leave the institution.

Question 5

What does the 'travel rule' (FATF Recommendation 16) require financial institutions to include in wire transfers?

Accepted Answer

Originator and beneficiary identifying information that must travel with the payment

Answer

The travel rule requires that originator name, account, and address, plus beneficiary name and account, accompany each wire transfer above the threshold.

Swift Practice Test

Swift Practice Test

Swift Regulatory Frameworks & Compliance 3