Escalating Workload, Data Quality Questions are Leading Effects of SWIFT Cover Payments Rule

New York - 21 April 2010

Dow Jones Survey: Greater Transparency in Payment Origination Viewed as Positive Change, But Concerns Over Duplicate Alerts, Data Quality Jumped After MT202 COV Took Effect

The majority (60 percent) of compliance and payments industry executives believe the new SWIFT cover payments rule MT202 COV raised the standard of sanctions compliance, but many also credit it with increased workloads and costs as well as mounting concerns over duplicate alerts and data quality, according to surveys conducted by Dow Jones.

Roughly half (49 percent) of survey respondents experienced an increase in workload following the introduction of MT202 COV while 36 percent said their costs of compliance increased. The rising costs come as 51 percent of respondents expect their budgets to be stagnant over the next year.

“Greater transparency in payment origination led to a significant increase in the number of payments subject to sanctions regimes,” said Rupert de Ruig, managing director of Risk & Compliance at Dow Jones. “Without a corresponding budget increase, compliance departments must employ more efficient processes and technologies to minimize the impact without increasing risk.”

When respondents were asked to rank their level of concern regarding key issues when screening wire transfer messages, their concern rose across the board after MT202 COV took effect. Data quality saw the biggest jump as 41 percent were “very” or “extremely” concerned about this issue before MT202 COV, but 62 percent said the same after the rule took effect.

Concern about a high number of duplicate alerts also jumped significantly as 47 percent of respondents identified this as an issue after MT202 COV took effect, compared to 30 percent before the rule was implemented.

“Issues with screening effectiveness will take center stage if companies are not using sanctions lists that are completely accurate and formatted to produce a single alert,” said de Ruig. “With record fines for sanctions breaches hitting the headlines and a significant number of institutions carrying out expensive remediation behind the scenes, executives should consider limiting exposure by carrying out a proactive evaluation of the effectiveness of their current tools.”

Dow Jones conducted two surveys to measure the impact of MT202 COV, which took effect in November 2009. The first survey, conducted from Aug. 31, 2009 to Sept. 9, 2009, received 52 responses and the second survey, conducted from March 23, 2010 to April 6, 2010, received 53 responses.

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