Swift Regulatory Frameworks & Compliance 4 — Questions and Answers
Question 1: How does the EU's Funds Transfer Regulation (FTR) 2015/847 interact with SWIFT payment messages?
- It exempts SWIFT messages from data requirements
- It requires complete payer and payee information to accompany SWIFT payment messages processed by EU PSPs (Correct answer)
- It prohibits EU banks from using SWIFT for high-value payments
- It applies only to card transactions
Correct answer: It requires complete payer and payee information to accompany SWIFT payment messages processed by EU PSPs
FTR 2015/847 implements FATF's travel rule for EU payment service providers, requiring structured payer/payee data in all payment messages.
Question 2: What is a SWIFT gpi (Global Payments Innovation) tracker used for in a compliance context?
- Tracking currency exchange rates
- Providing end-to-end visibility on cross-border payment status, fees, and FX conversion (Correct answer)
- Replacing AML screening
- Monitoring SWIFT network uptime
Correct answer: Providing end-to-end visibility on cross-border payment status, fees, and FX conversion
SWIFT gpi's Tracker gives sending and receiving banks real-time visibility into payment status, which supports investigations and dispute resolution.
Question 3: When a US bank receives a SWIFT MT 202 COV message, what additional compliance obligation applies compared to a standard MT 202?
- No additional obligations
- The bank must screen the underlying originator and beneficiary information from the MT 103 that the COV covers (Correct answer)
- The bank must report the transaction to FinCEN automatically
- The bank must obtain written approval from the Federal Reserve
Correct answer: The bank must screen the underlying originator and beneficiary information from the MT 103 that the COV covers
An MT 202 COV covers a customer credit transfer, requiring the intermediary bank to screen the originator and beneficiary data included in the message.
Question 4: What is the purpose of SWIFT's KYC Registry?
- To store SWIFT message encryption keys
- To allow financial institutions to share standardized due diligence data about their correspondent relationships (Correct answer)
- To replace national AML reporting
- To manage SWIFT user account passwords
Correct answer: To allow financial institutions to share standardized due diligence data about their correspondent relationships
The KYC Registry is a centralized platform where banks upload and share standardized compliance documentation to streamline correspondent banking due diligence.
Question 5: Under FinCEN's rules, what is the threshold at which US banks must collect and retain originator information on international wire transfers?
- $1,000
- $3,000 (Correct answer)
- $5,000
- $10,000
Correct answer: $3,000
FinCEN's Funds Transfer Rule (31 CFR 1010.410) requires banks to collect and retain originator and beneficiary information for wire transfers of $3,000 or more.
Question 6: What does SWIFT's Compliance Analytics service provide to financial institutions?
- Free legal advice on sanctions law
- Data-driven insights on payment flows to support sanctions, AML, and correspondent banking risk assessment (Correct answer)
- Automated SWIFT message generation
- Real-time currency conversion rates
Correct answer: Data-driven insights on payment flows to support sanctions, AML, and correspondent banking risk assessment
SWIFT Compliance Analytics uses aggregated, anonymized transaction data to help banks identify unusual payment patterns and assess counterparty risk.
Question 7: Which SWIFT message category is primarily used for financial institution transfers (bank-to-bank) rather than customer payments?
- MT 103
- MT 202 (Correct answer)
- MT 900
- MT 950
Correct answer: MT 202
MT 202 messages are used for bank-to-bank transfers, while MT 103 messages carry customer payment instructions.
Swift Regulatory Frameworks & Compliance 4
How does the EU's Funds Transfer Regulation (FTR) 2015/847 interact with SWIFT payment messages?