SWIFT at a glance

SWIFT HISTORY

> Increase in International trade and commerce after World War-II
> Efficient Banking System for payment mechanism with Security, Reliability and Confidentiality was needed.
> Computer and Telecommunication technology came to rescue
> Co-operative organization SWIFT was born

SWIFT is the industry-owned co-operative

Established in 1973

Head quarters at Brussels Belgium

Common language for international financial transactions

Secure, Standardised messaging services

Provides interface software

SWIFT USAGES

Payments
Securities
Treasury
Trade
SWIFT in figures

Why SWIFT
Advantages of SWIFT
> It is Highly Secured
> It is Highly Reliable
> It is very cost effective
> It is Standardized – accepted globally
> It is a STANDARD SETTER
> Offer standardized web based trust service and e-payments to corporate
customers active in B2B E-commerce

SECURITY

SWIFT Security objectives

CONFIDENTIALITY

Information is disclosed to authorized persons at authorized location only

INTEGRITY

Information can be RELIED upon ABSOLUTE, ACCURATE and VALID.

AVAILABILITY

Information and the associated services is accessible and usable when needed

ACCOUNTABILITY
> Every individual authorized to use the system is accountable

SWIFT SECURITY

> Key Authentication Mechanism
> Encryption
> Checksum

SWIFT BANK IDENTIFICATION CODE (BIC)

BIC stands for Bank Identifier Codes

It is the unique identification code of a particular Bank / Branch

SWIFT handles the registration of these codes

The code is 8 or 11 characters

4 characters – bank code
2 characters – country code
2 characters – location code
3 characters – branch code, optional ( ‘XXX’ for primary office)

Where an 8-digit code is given, you may assume that it refers to the primary office.

BIC is often called SWIFT addresses or code

Examples of BIC
BIC ICICINBB is for ICICI Bank, Mumbai
ICIC identifies ICICI Bank
IN     identifies country code for India
BB    identifies Code for Mumbai
BIC ICICINBB011 is for ICICI Bank, Andheri
011   identifies Code for Andheri Branch

BKE/ AUTHENTICTY MESSAGE

BKE stand for Bilateral Key Exchange
BKE is an essential part of the security of the S.W.I.F.T. network.
Exchanges secret bilateral authentication keys
Automatically generates code while sending
It also decodes and confirm while receiving
Once BKE relation established within 2 banks they can send and receive authenticated messages between them.

If   BKE present then only MT 999 can be exchanged   (MT 999 Free format Unauthenticated Message)
BENEFIT BKE
–          Automatically verifies the authenticity of message
–          Smooth process without human intervention
–          Cost saved for processing
–          Processing time reduced
SWIFT MESSAGE

It is a written communication in a structured format
It is not a file
No Attachments can be sent
Message types (MT)‏
SWIFT message as identified by 3 digit number
Each MT have diff Structure / Use
Message categories series of MTs relating to a particular class of transaction, as indicated by the first digit of the MT number.
Message Blocks Header, Text , Trailer

SWIFT MESSAGES BLOCKS
Header:

Contains control information
Addressee, processing, priority and security.

Text

Contains the substance of the message.
format and structure varies according to the MT

Trailer
For control purposes, CHK Trailer, PDE Trailer

Category	Details
1	Customer payments and cheques
2	Financial institution transfers
3	Treasury Markets-FX, Money Markets and Derivatives
4	Collection and cash letters
5	Securities Markets
6	Treasury Market- Precious Metals/ Syndications
7	Documentary Credits and Guarantees
8	Travellers Cheques
9	Cash Managements and Customers Status

Structured / Free Format Message

> X99 in each category are free format message
(799 is free format message for LC/BG)‏
> All other are structured MTs
> Structured as per Type and use of Message
> Except 999 all other free format MTs are authenticated

MT 110 Scope
> Advise of Cheque(s)‏
> Sent by a drawer bank, or a bank acting on behalf of the drawer bank to the drawee bank
> It is used to advise the drawee bank, or confirm to an enquiring bank, the details concerning the cheque(s) referred to in the message

MT 110 FORMAT
MT 111 Scope
> Request for Stop Payment of a Cheque
> This single message type is sent by a drawer bank, or a bank acting on behalf of the drawer bank, to the drawee bank

ROAD TO STP
Nostro and Currency must match
Ben bank correspondent SWIFT BIC
Ben bank SWIFT BIC or A/c No. with Correspondence
Beneficiary Full A/c No. given
Beneficiary Correct Name Given
Swift structure is strictly followed

Collection MT4xx messages
MT400 : Advice of Payment
MT410 : Acknowledgement
MT412 : Advice of Acceptance
MT 499 : Authenticated free format message for documents sent under collection basis.

MT 734 Scope

> This message is sent by the issuing bank to the bank from which it has received documents related to a documentary credit. It may also be sent by the bank nominated to pay/accept/negotiate/incur a deferred payment undertaking to the bank from which it has received documents.
> It is used to advise the Receiver that the Sender considers the documents, as they appear on their face, not to be in accordance with the terms and conditions of the credit and that, consequently, it refuses them for the discrepancies stated. The Sender also states that it is holding the documents at the disposal of, or returning them to the Receiver.

MT 740 Scope

> This message is sent by the issuing bank to the reimbursing bank.
> It is used to request the Receiver to honour claims for reimbursement of payment(s) or negotiation(s) under a documentary credit.
> The MT 740 authorises the reimbursing bank to debit the account of the Sender, or one of the Sender’s branches if so indicated, for reimbursements effected in accordance with the instructions in the MT 740.

MT 742 Scope

> This message is sent by the paying/negotiating bank to the bank authorised to reimburse the Sender for its payments/negotiations.
> It is used to claim reimbursement of payment(s) or negotiation(s) under a documentary credit, as relevant to the reimbursing bank.

Reimbursement Payment

MT 747 Scope
> It is an ammendment to MT740. This message is sent by the bank which has issued an authorisation to reimburse (issuing bank) to the reimbursing bank.
> It is used to inform the Receiver about amendments to the terms and conditions of the credit relevant to the authorisation to reimburse.
> The amendment is to be considered as part of the authorisation to reimburse.

MT 754 Advice of Payment/Acceptance/Negotiation

This message is sent by the paying, accepting or negotiating bank, or the bank incurring a deferred payment undertaking, to the issuing bank. It may also be sent by the bank to which documents have been presented to a bank that has been nominated to pay/accept.
> It is used to advise the Receiver that documents were presented in accordance with the credit terms and are being forwarded as instructed.

MT 756 Advice of Reimbursement or Payment
> This message is sent by the issuing bank to the bank from which it has received documents or by the reimbursing bank to the bank from which it has received a reimbursement claim
> It is used to advise the Receiver about reimbursement or payment, to that bank, for a drawing under a documentary credit for which no specific reimbursement instructions or payment provisions were provided.

MT 799 Free Format Message

These are authenticated free format messages typically used for L/c and BG cases.
Any messages to be sent under L/C/ BG which are general in nature, or which is used to convey a discrepancy, a MT799 can be sent.

Swift for Bank Guarantees

Below MTs are used for BG

MT	Purpose
760	Issue or request the issue of BG
767	Amendment of BG
768	Acknowledgement of a BG Message
769	Advice of Reduction or Release

MT 760 Guarantee Format Specifications

Status	Tag	Field Name
M	27	Sequence of Total
M	20	Transactions of Reference Number
M	23	Further Identification
O	30	Date
M	40C	Applicable Rules
M	77C	Details of guarantee
O	72	Sender to Receiver information

MT 700 LC Format Specifications

Status	Tag	Field Name
M	27	Sequence of Total
M	40A	Form of Documentary Credit
M	20	D/C Number
M	31C	Date of Issue
M	40E	Applicable Rules
M	31D	Date and Place of Expiry
M	50	Applicant
M	59	Beneficiary
M	32B	Currency Code , Amount
M	39C	Additional Amount Covered
M	41D	Available with…
M	42C	Drafts at….
M	42D	Drawee Bank – Name & Address
M	43P	Partial Shipments
M	43T	Transhipment
M	44E	Port of Loading / Airport of Dep.
M	44F	Port of Discharge / Airport of Desti.
M	44C	Latest Date of Shipment
M	45A	Description of Goods / Services
M	46A	Documents Required
M	47A	Additional Conditions
M	71B	Charges
M	48	Period of Presentation
M	49	Confirmation Instructions
M	53A	Reimbursing Bank
M	78	Instruction to Pay/Acceptance/ Negotiating Bank