Bank groups call for new payment message standards

Bank groups call for new payment message standards

US banking industry associations The Wolfsberg Group and The Clearing House are calling for the introduction of a new payment message format that includes data on those conducting and receiving international wire transfers, which could be used to track money laundering and terrorist funding activity.

The Wolfsberg Group - which develops standards and products for AML and counter terrorist financing policies - and The Clearing House Association say the new message format for third-party cover payments would include information about the originator and the beneficiary of the payment.

They say that with the support of the global regulatory community, and subject to acceptance by banking co-operative Swift, the new payment message format could be implemented as early as November 2008.

The groups have also called for the adoption of basic payment message standards by financial services firms to enhance transparency of international wire transfers. These include full cooperation with other banks when asked to provide data about the parties involved in a transfer.

"These actions will promote the effectiveness of risk-based programs designed to reduce vulnerabilities associated with financial intermediation and enable banks to avoid the use of their facilities by individuals and organisations that the banks would not accept as their own customers, including, most particularly, those engaged in money laundering, terrorist financing or transactions in violation of relevant sanctions," the associations says in a statement.

Earlier this year The US Treasury division Financial Crimes Enforcement Network (Fincen) told Congress that the reporting of cross-border wire transfer data by banks is "technically feasible" and may be valuable to efforts to "combat money laundering and terrorist financing".

Fincen is continuing its research into the establishment of a data collection system that would require US banks to report details of the 500+ million international wire transfers sent each year.

US banks are already required to keep records for transfers over $3000 but are not required to send the data to regulators.

The moves to raise transparency come at a sensitive time, following last summer's disclosure that the US government had been secretly scrutinising suspect wire transfers sent over the interbank Swift network.

Belgium-based Swift came under fire from Belgian and EU authorities following disclosure of the programme, but the network has always defended its compliance policies, claiming that its US branch has been subject to compulsory subpoenas that required it to hand over some stored message data to the US Treasury.

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