Separating Messages Flashcards
What are the three types of Swift messages?
MT103, MT202 and MT202COV
When is the MT103 payment message used?
When a single payment is being made btw two banks. That msg gives instructions to the receiver of the transferred funds.
What are MT202 and MT202CVO messages?
Bank to bank instructions that tell the intermediary bank to cover the payment of the beneficiary’s bank by crediting the account and debiting the sending bank’s account. FIs use these messages to make customer credit transfers and interbank transfers.
What is different about the MT202CVO introduced in 2009?
The payment message contains a sequence B field. Sequence B information must be identical to the same fields of 50a and 59b of the underlying MT103. This is to allow for the identification and screening of the underlying parties.
How can the MT202 be used to evade sanctions?
The Swift User Handbook (2009) instructs the use of MT202COV when a payment is sent to an intermediary bank involving an underlying customer credit transfer, and both the Basel Committee on Banking Supervision and the Wolfsberg Grp have advised banks to follow this process. If the sending bank is motivated to conceal the ultimate beneficiary of the funds, it could avoid sending full info to all the banks involved in the transaction. Instead, the sending bank could send an MT103 medsage to the beneficiary’s bank to credit the customer’s account, which would be the ultimate destination of the funds. The sending bank would perhaps include a reference to the cover payment and send a MT202 msg to the intermediary bank, with instructionw to credit the beneficiary’s bank. The msg would have no info concerning the ultimate beneficiary or sender and no sequence B.
What tactics do people use to try to truck an automated screening tool or otherwise avoid detection during sanctions payment screening?
- they may rearrange the data if they know of a field that isn’t routinely screened.
- they may replace info with false data, eg. Bank identifier code assigned to a bank in a neutral country, unusual combis of characters, nonsensical input
- red flag phrases such as “no name” or “on behalf of”
- alter or abbreviate the sender or beneficiary’s name
- manually alter a msg
What are nested accounts?
Nested accounts happen when a foreign FI accesses the US FI through an account it holds with another foreign FI
For trade-based transactions, what are the various forms of concealment?
- obscuring the origin of merchandise
- obscuring the path of a vessel
- transferring letters of credit
- removing names of FIs involved in the backing instrument, whether through careful construction of alternative info or falsification of the documents themselves.
What is transshipment?
Transshipment is the delivery of goods or containers to an intermediate destination and then on to a further or final destination.
What is an important part of the overall process in transactions that involve ships?
Screening International Maritime Organisation (IMO) numbers
What happens when the property of an entity blocked because of the 50% rule comes within the US or comes within the control of a US person?
The property is blocked until one of these events takes place:
- OFAC allows the unblocking, or
- OFAC takes the blocked person off the SDN list.
Even if the blocked person’s ownership of the entity later falls below 50%, the property remains blocked.
