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Ask the Expert Library

Note: click on the panels to the left to see the "Ask the Expert" responses for each individual BAFT committee.

Payments and Compensation Committee

Committee Officer(s): Phil Zeidner, BNY Mellon
Date Submitted: April 11, 2014
Keywords: Payments, FT72, Transaction Monitoring, Mapping, Money Laundering
Question:

I have a question regarding transaction monitoring* and related software. How is your organizations handling the parties mapped in FT72 (i.e. /BNF/ - /INS/ etc.) Is your transaction monitoring software:

  • Scrubbing FT72 and mapping it to the appropriate fields in the transaction monitoring system
  • Is there middleware providing the appropriate mapping and then feeding it to the transaction monitoring system
  • Not mapping FT72 and evaluating transaction patterns based on mapped fields

* Transaction monitoring is really suspicious activity monitoring. This monitoring is not part of the real-time transaction but performed after the fact to identify and report suspicious activity related to money laundering and terrorist financing.

Committee Response:

Seems to be a fairly simple question. BSA is picking up Field 72 and then using it in whatever program they’re running.

Most of monitoring system is checking top to bottom in message.

Most banks are checking 72. Moving it somewhere else? Pushing data in 72 and pushing it to ben field – tougher to answer.

Doesn’t know if there are many systems that can take data from 72 and map into BNF. For example, if “Cuba” turns up in 72, they will monitor that item. Does not think that systems are moving 72 info into ben field.


Date Submitted: April 11, 2014
Keywords: Funds Fee, CHIP, Correspondent Bank
Question:

My question is in regards to return of funds. Our customer submits instructions for us to pay XYZ Bank and we utilize the NATS database and determine that ABC Bank is a correspondent as their CHIP participant number is linked to the UID of XYZ Bank. XYZ Bank returns the funds stating account closed and deducts $40.00.

Do the committee members feel that ABC Bank is justified in deducting their return of funds fee when they have not updated their now closed relationship with CHIPS and still show as a valid correspondent?

Committee Response:

ABC Bank is not justified.

In the past, members have gone back to banks whose database information was not updated to find out when the changes were made.

For example, if a payment changed over the weekend, or instructions came in on Friday to pay on Monday, and the data was sorted for a Monday payments – the update may not have come in on time.

Members felt they needed more information on the situation – depending on how willing the FI was to go back and fight for that item. Suggest reaching out to bank – bank never put in form because customer never officially requested that the account be closed.

Difference if broadcast was put out – within industry, can use. Different situation without broadcast announcement.


Funds Transfer Product Management Committee

Committee Officer(s): Steve Wojciechowicz, Deutsche Bank
Date Submitted: June 19, 2014
Payments, MT103, Mapping, MT910, F50, F52
Question:

A member had an "Ask the Expert" question: does the SWIFT MT910 having restriction on the by order fields where F50 and F52 are allowed but only one can be utilized.

The member would like to better understand market practice or industry experiences from other Financial Institutions as to is done when they receive an Inbound MT103 triggering an outbound MT910.

  • MT103 having the F50 and F52, how does one map both information to the outbound MT910 knowing that only one of these fields can be utilized.
  • Are F50 and F52 data kept and one is included in the outbound F72 using SWIFT codeword such as /INS/?
  • If data of one of the inbound fields is ignored do we breach any regulation, such as the Travel Rule, …?
Committee Response:

ABC Bank is not justified.

The purpose of the 910 is to advise the client that they’ve received an incoming credit; it is not an authenticated advice of payment. If client is looking for full information on a 103, then send 103 instead of a 910.

The value of F50 or F52 depends on who is asking for it. For example, a corporate client might find more value in F50 while a bank might require F52 to identify a correspondent bank or intermediary.

There is a part of the 910 that is free-format, F72 – if issue is that they are not getting full information, pick one field and put the other in the detailed transaction information. However, note F72 is intended for information exchanged between two banks. If the receiver is a bank, for example if the incoming message was an MT202, then F72 is relevant. If the incoming message had been an MT103, to advise bene of credit, F72 is not relevant.


Information Reporting Committee

Committee Officer(s):
Date Submitted: April 16, 2014
Keywords: Fees, Payments, Correspondent Bank
Question:

A member has “come across an increasing situation which is now beginning to add up in costs, as we must make up return of funds fee deductions even though we made the original payment based upon real time information from CHIPS.”

My question is in regards to return of funds. Our customer submits instructions for us to pay XYZ Bank and we utilize the NATS database and determine that ABC Bank is a correspondent as their CHIP participant number is linked to the UID of XYZ Bank.

XYZ Bank returns the funds stating account closed and deducts $40.00.

Do the committee members feel that ABC Bank is justified in deducting their return of funds fee when they have not updated their now closed relationship with CHIPS and still show as a valid correspondent?

Committee Response:

Reality is “justified” isn‘t a word you’ll see in this context. This is a revenue opportunity, and no bank will stop doing it. There is nothing you can do about it.

This is where we predicted when subject was first suggested – new idea 10 years ago. Banks fought this idea. As soon as one bank starts doing this, others will do it and it will all “net out”. Someone did it, and here’s where we are. Answer: “Just start charging, too.”