Find out how you can harness ISO 20022 to reduce false positive alerts, generate quantifiable efficiency gains, improve SLAs, and reduce costs.
The situation today
Regulatory reporting requirements are continuing to ramp up, which places additional pressures on financial institutions – particularly as identifying the necessary regulatory data can be challenging.
In some situations, specific to particular countries or currencies, financial institutions need to apply different purpose codes in order to meet local regulatory requirements. For example:
- A cross-border payment of over €50,000 from France to a non-Eurozone country requires the use of a payment purpose code for balance of payments statistics.
- A payment from Japan to China requires a declaration that the payment is not related to North Korea or Iran, with payment purpose codes needed for Japanese and Chinese regulators.
- When importers send cross-border payments to Indonesia, they’re required to provide regulatory reporting data in the MT field reserved for remittance information, including purpose code, invoice number and amount.
In practice, the relevant regulatory information is often found in remittance information fields and rarely makes use of the relevant code word, /PURP/. As a result, extraction and reporting can become an operational overhead.
Missing regulatory data can also result in either rejects or further requests for information, meaning that the beneficiary has to wait longer for funds to become available.
This can lead to significant challenges for payment originators and beneficiaries. In the case of Indonesia, analysis of Swift traffic shows that over the course of 2022, more than 5% of MT 103 rejected flows were due to invalid regulatory information. Importers that fail to meet regulatory data requirements are not only negatively impacting their Indonesian suppliers, they also need to manage additional enquiries from their banks to provide the missing code and purpose data.
The opportunity with ISO 20022
ISO 20022 includes structured elements that make it easy for you to identify the nature and purpose of a transaction, and thereby fulfil regulatory reporting requirements.
With regulatory data readily available, you can reduce your operational and processing costs, and even make this a self-service function for regulators. Eliminating the need for further enquiries also leads to an improved customer experience.
Improve customer experience, reduce operational and processing costs.