Recent events in the international payments world have highlighted yet again the confusion over SWIFT’s responsibilities in the payments chain.
SWIFT was created to send payments instructions from a sender and a receiver. Over the past 40 years that basic role of SWIFT has not changed.
SWIFT’s major contribution to the payments world was the work it carried out in messaging standards and developing different message types to match the needs of the users.
SWIFT’s role simply put was to define the format of a date, but not to determine whether it was the right date. The formats for account details were also developed, but not the veracity of the data entered. SWIFT determined that account number had to be of a certain length, but does not and never has checked to make sure the account number is real.
With many financial institutions looking for standards for in the way data is defined, categorized, and shared. In some cases, broad industry guidelines are being used as de facto standards in areas beyond their initial intended purpose. This is why it is so important for FIs to map out and document the planned and as-built characteristics of their IT infrastructure and individual products and solutions, as well as ensuring that there is a comprehensive QA process in place.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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