Belgium based Society for Worldwide Interbank Financial Telecommunication, better known as SWIFT, is the trusted transaction communication platform banks use to communicate funds transfers to other financial institutions globally. SWIFT is the communications backbone for international wire transfers, among other payment activities. They are a key component to the 110+ million international wire transfer transactions that originate from the U.S. each year. When the SWIFT system suffered some rather serious and public security breaches, resulting in the loss of millions of dollars, things got serious. SWIFT has been tightening controls and working with its bank members to make sure their security around who gets access to SWIFT’s capabilities is sufficient to protect this vital payments mechanism. As reported in Finextra, SWIFT is going to introduce new security standards for banks and conduct audits to make sure they are followed:
The standards will be mandatory for all banks, who will be required to demonstrate their compliance annually against 16 mandatory controls set out in an ‘assurance framework’.
Although banks are merely required to provide ‘self-attestation’, Swift says it will perform random spot checks, and urge counterparty banks to do likewise.
And just to make sure that banks are following the new requirements, SWIFT will make public those institutions who are compliant and those who failed:
Inspections and enforcement will begin on 1 January 2018, when banks’ compliance status will be made available to their counterparts. Firms who fail to achieve the required standards may not only find themselves locked out by their counterparts, but will also be reported to their regulators.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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