SWIFT

Society for Worldwide Interbank
Financial Telecommunications
 Introduction to topic
 Emergence of SWIFT
 Users of SWIFT
 Services offered by SWIFT
 How does SWIFT makes money?
 How does SWIFT works ?
 SWIFT address
 SWIFT messages
 SWIFT -Merits and Demerits
 SWIFT is a messaging network that financial
institutions use to securely transmit information and
instructions through a standardized system of codes.
 Non profit organisation comprised of member
financial institutions .
 Owned by the banks and financial institutions .
 Dedicated to managing a global financial messaging
and fund transfer system .
 Headquarters are in La Hulpe ,Brussels.
 It also acts as a UN sanctioned ISO body for creation
and maintenance of financial messaging standards .
 Prior to SWIFT, Telex was the only available means of
message confirmation for international funds transfer.
 Telex was hampered by low speed, security concerns, and
a free message format.
 Telex did not have a unified system of codes like SWIFT
to name banks and describe transactions. Telex
senders had to describe every transaction in sentences
which were then interpreted and executed by the receiver .
This led to many human errors.
 SWIFT system was formed in 1974. Seven major
international banks formed a cooperative society to
operate a global network that would transfer financial
messages in a secure and timely manner.
In the beginning, SWIFT founders designed the network to
facilitate communication about Treasury and correspondent
transactions only.
 Banks
 Brokerage Institutes and Trading Houses
 Securities Dealers
 Asset Management Companies
 Clearing Houses
 Depositories
 Exchanges
 Corporate Business Houses
 Treasury Market Participants and Service Providers
 Foreign Exchange and Money Brokers
Applications
 SWIFT connections enable access to a variety of

applications, which include real-time instruction
matching for treasury and forex transactions, banking
market infrastructure for processing payment
instructions between banks, and securities market
infrastructure for processing clearing and settlement
instructions for payments, securities, forex,
and derivatives transactions.
Business Intelligence
 SWIFT has recently introduced dashboards and

reporting utilities which enable the clients to get a
dynamic, real-time view of monitoring the
messages, activity, trade flow, and reporting. The
reports enable filtering based on region, country,
message types, and related parameters.
Compliance Services
 Aimed at services around financial crime

compliance, SWIFT offers reporting and utilities
like Know Your Customer (KYC), Sanctions, and
Anti-Money Laundering (AML).
 SWIFT is a cooperative society owned by its
members. Members are categorized into classes based
on share ownership.
 All members pay a one-time joining fee plus annual
support charges which vary by member classes.
 SWIFT also charges users for each message based on
message type and length. These charges also vary
depending upon the bank’s usage volume – different
charge tiers exist for banks that generate different
volumes of messages.
SWIFT assigns each financial organization a unique
code that has eight characters . The code is
interchangeably called the bank identifier code (BIC),
SWIFT code, SWIFT ID, or ISO 9362 code.
 First four characters: the institute code

 Next two characters: the country code
 Next two characters: the location/city code
SWIFT Address - NWBKGB2L
Location/City
Institute code Country code
code
• NWBK • GB • 2L
• Nat West • United • London
Kingdom
 Messages are identified by structured configuration.
 All messages start with the letter MT.
 This is followed by 3 digit number .
 1st digit – represents category relating to a particular
financial category .
 2nd digit – represents the group denoting that
messages are related to similar parts of a transaction .
 3rd digit – denotes the individual message
e.g. - MT 202
Financial institutions transfer ,third party
 MT0nn System messages
 MT1nn Customer Payments
 MT2nn Financial institutions transfer
 MT3nn FX,Money Market and Derivatives
 MT4nn Collections and cash letters
 MT5nn Securities Markets
 MT6nn Precious metals and syndications
 MT7nn Documentary credits and Guarantees
 MT8nn Travellers cheques
 MT9nn Cash Management and Customer Status
HOW SWIFT WORKS ?
c
r
e
d
i
t
Swift message
 Assume a customer of a Bank of America branch in
New York wants to send money to his friend who
banks at the UniCredit Banca branch in Venice.
 The New York customer can walk into his Bank of
America branch with his friend’s account number and
UnicaCredit Banca’s unique SWIFT code for its Venice
branch.
 Bank of America will send a payment transfer SWIFT
message to the UniCredit Banca branch over the
secure SWIFT network.
 Once Unicredit Banca receives the SWIFT message
about the incoming payment, it will clear and credit
the money to the Italian friend’s account.
 a high level of security of money transfers worldwide;
 the ability to transfer and receive any sum range;
 calculation of funds in any currency;
 minimum commission;
 the ability to receive or send funds at almost any bank of
the world;
 if the system fails, it will compensate for losses.
Disadvantages
 transfer can take 7 days;
 due to the involvement of several banks in the process, the
system may fail.

SWIFT

Uploaded by

Copyright:

Available Formats

SWIFT

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SWIFT

Uploaded by

Copyright:

Available Formats

Society for Worldwide Interbank

 SWIFT connections enable access to a variety of

 SWIFT has recently introduced dashboards and

 Aimed at services around financial crime

 First four characters: the institute code

You might also like