The Federal Reserve Board on Thursday invited public comment on a proposal to adopt the ISO®20022 message format for the Fedwire® Funds Service. If approved, the proposed action would replace the Fedwire Funds Service's current, proprietary message format.
Potential benefits to the adoption of the ISO 20022 message format include enhanced efficiency of both domestic and cross-border payments between the Fedwire Funds Service and other payment or messaging systems as well as a richer set of payment data that could help banks and other entities meet evolving requirements to screen payments for sanctions and anti-money laundering purposes. The proposed migration to the ISO 20022 message format would take place in three phases beginning in 2020 and ending in 2023.
The Fedwire Funds Service is a real-time gross settlement system owned and operated by the Federal Reserve Banks. It enables participants to make final payments using their balances held at Reserve Banks or intraday credit provided by the Reserve Banks. The Fedwire Funds Service currently uses a proprietary message format that supports multiple types of payments- related communications.
The International Organization for Standardization (ISO) is an independent, non-governmental organization comprised of 161 national standards bodies that publishes standards for a broad range of industries. Many foreign wire transfer systems, including those used by key U.S. trading partners, have already adopted ISO 20022. The Federal Reserve, in its 2015 Strategies for Improving the Payment System paper recommended that the U.S. payments industry develop a strategy for adopting the ISO 20022 message format for U.S. payment transactions. Subsequent public and industry engagement and outreach indicate that the migration could be beneficial for Fedwire Funds Service participants.