Berlin, November 2002 – I have registered for a seminar in legal rhetoric and communication. When I arrive, I see only a few pitiful people in class. I wonder: “Should I really stay?”
“In the legal business, people don’t communicate, especially write, effectively.”, say the presenters.
Working in-between legal and finance, I know today that they were (and still are) right. Besides, I was right to stay, too.
On my blog, I want to make legal and finance easy. I hope you enjoy reading.
Wednesday, April 15, 2015
SWIFT – Cool IT company or boring cooperative?
is a rather cool name, at least it sounds cool. Before you get
excited, let me take you back to earth again: SWIFT stands for
“Society for Worldwide Interbank Financial Communication”. Now,
the name sounds immediately a bit less cool, no?
top of this definition, the Belgium company is located 15 km
south-east of Brussels, in a village called La Hulpe, near the Forêt
how can I get you interested in reading this post? Consider the
is at the heart of the global financial system. Without SWIFT’s 22
million daily messages, there would simply be no financial system!
in 1973, SWIFT is a Belgium co-operative founded and held by its
10,800 members of the financial services industry. SWIFT ensures that
banks can talk to each-other, in total confidentiality and integrity.
Most well known are payment messages, which ensure that you can pay
someone else by debiting your and crediting his bank account.
is how Art. 3 of the company’s Articles of Association describes
object of the Company is for the collective benefit of the
Shareholders of the Company, the study, creation, utilization and
operation of the means necessary for the telecommunication,
transmission and routing of private, confidential and proprietary
only offers the means for telecommunication to its members. However,
it is neither responsible for the content nor does it hold itself any
financial assets or manages accounts on behalf of customers.
you could be tempted to see SWIFT as a simple telecommunications
company that provides a sort of GMAIL account for banks. This would,
nonetheless, be a bit too restrictive. SWIFT also sets standard
messages for specific financial products such as collections, cash
letters, documentary credits, and guarantees.
SWIFT products include business intelligence such as trade finance
data as well as compliance services such as KYC, Anti-money
Laundering (AML), and sanctions.
million messages are currently send through SWIFT each day. Compared
to currently 196 billion Email messages send per day, this seems
ridiculous. But 22 million is still a huge number – roughly 260
messages per second.
than 90 % of SWIFT messages relate to payments and securities.
Treasury, trade, and system messages only play a minor role.
main market is Europe, Middle East, and Africa. The Americas are
second, followed by Asia Pacific.
the above figures show, without SWIFT, the global financial system
would not work. Hence, there is a clear necessity to regulate SWIFT.
But how can you regulate such a global financial communications
provider which is neither a payment nor a settlement system?
an arrangement with the central banks of the G-10 countries, the
National Bank of Belgium acts as lead overseer of SWIFT. The main
objectives of this oversight are security,
operational liability, business continuity, and resilience of the
SWIFT infrastructure. SWIFT’s main risk is obviously operational,
i.e. the risk that deficiencies in information systems or internal
controls, human errors, and management failures cause or exacerbate
other types of risk.
2012, the regulatory framework has been reviewed and a SWIFT
Oversight Forum has been established, through which information
sharing on SWIFT oversight activities was expanded to a larger group
of central banks. The issues discussed can include all topics related
to systemic risk, confidentiality, integrity, availability and
I have mixed feelings about SWIFT. On the one hand, its messages look
like souvenirs of the pre-computer age, containing administrative
boxes ranging from MT 400 to MT 700. On the other, it is an
organization that dealt with real-time messaging services long before
we even heard about internet or Email. Not so boring after all…