Just 22% of industry executives say they are prepared for the additional workload that will come their way when the new Swift MT202 COV message standard comes into effect in November, according to a survey from Dow Jones Risk & Compliance.
MT202 COV is being introduced on 21 November in a bid to improve transparency and keep payments messages in line with regulatory demands related to anti-money laundering and the fight against terrorist funding.
For MT202 COV messages it will be mandatory to include a copy of selected fields from the underlying customer credit transfer sent by cover method, enabling correspondents involved in processing the transaction to screen payments.
The Dow Jones poll of 51 attendees of the upcoming Sibos conference reveals less than a quarter of respondents are ready for the extra workload this will create.
Furthermore, a misconception appears to exist within the industry, with 29% of respondents believing they will not see the number of alerts they receive increase. A further 16% don't know what will happen.
Dow Jones says this is "concerning" and shows many in the industry may not be prepared for the impact MT202 COV will have on their compliance departments.
Respondents are most concerned about increased compliance costs caused by MT202 COV, this is particularly worrying for the 31% anticipating that their compliance budget will remain stagnant in the coming year.
Nearly half (45%) expect a heavier compliance workload while 60% are concerned about a decrease in efficiency after MT202 COV takes effect. Over 60% expect delayed payments.
Companies would do more to protect their reputation but can not handle the increased workload, says Dow Jones. Over three quarters of respondents say they would like to extend screening to additional information contained in messages and a similar percentage want to screen names and true alerts against other client databases.
When screening wire transfer messages, 41% of respondents say they are "very" or "extremely" concerned about getting too many false positives. In addition, 41% are concerned about data quality issues of sanction lists, 41% about the risk of false negatives, 30% about a high number of duplicate alerts and 29% about difficulty in clearing alerts.
Dow Jones says executives are limited by current technologies which do not allow them to expand their screening programme beyond regulatory requirements while maintaining a manageable workload.
Rupert de Ruig, MD, risk and compliance, Dow Jones & Company, says: "Greater transparency in payment origination from November 21st will lead to a significant increase in the number of payments subject to sanctions regimes. Companies must prepare for a corresponding increase in the number of high-priority alerts requiring immediate investigation."