Society for Worldwide Interbank Financial Telecommunication

Society for Worldwide Interbank Financial Telecommunication

Type	Cooperative
Founded	1973
Headquarters	Brussels, Belgium
Industry	Telecommunications
Products	Financial Telecommunication
Employees	> 2000
Website	www.SWIFT.com

The Society for Worldwide Interbank Financial Telecommunication ("SWIFT") operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions. SWIFT also markets software and services to financial institutions, much of it for use on the SWIFTNet Network, and ISO 9362 bank identifier codes (BICs) are popularly known as "SWIFT codes".

The majority of international interbank messages use the SWIFT network. As of November 2008^[update], SWIFT linked 8,740 financial institutions in 209 countries.^[1] SWIFT transports financial messages in a highly secure way, but does not hold accounts for its members and does not perform any form of clearing or settlement.

SWIFT does not facilitate funds transfer. Financial institutions would need a corresponding banking relationship for financial transactions.^{[clarification needed]} Not all financial institutions have banking business relationships, but rather peripheral. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features.

SWIFT is a cooperative society under Belgian law and it is owned by its member financial institutions. SWIFT has offices around the world. SWIFT headquarters are located in La Hulpe, Belgium, near Brussels. An average of 2.4 million messages, with aggregate value of $2 trillion, were processed by SWIFT per day in 1995.

It was founded in Brussels in 1973, supported by 239 banks in 15 countries. It started to establish common standards for financial transactions and a shared data processing system and worldwide communications network. Fundamental operating procedures, rules for liability etc., were established in 1975 and the first message was sent in 1977.

Standards

SWIFT cooperates with international organizations for defining standards for message format and content. SWIFT is also registration authority (RA) for the following ISO standards:^[2]

• ISO 9362:1994 Banking—Banking telecommunication messages—Bank identifier codes
• ISO 10383:2003 Securities and related financial instruments—Codes for exchanges and market identification (MIC)
• ISO 13616:2003 IBAN Registry
• ISO 15022:1999 Securities—Scheme for messages (Data Field Dictionary) (replaces ISO 7775)
• ISO 20022-1:2004 and ISO 20022-2:2007 Financial services—UNIversal Financial Industry message scheme

In RFC 3615 urn:swift: was defined as Uniform Resource Names (URNs) for SWIFT FIN.^[3]

Operations centers

SWIFT operates two data centers, one in the US and one in the Netherlands. These centers share information in near real-time. In case of a failure in one of the data centers, the other is able to handle the traffic of the complete network. Currently SWIFT is building a third data center in Switzerland, which is scheduled to start operating in the second half of 2009.^[4] Once this is completed, data from European SWIFT members will no longer be mirrored to the US data center. Also called Distributed Architecture will partition messaging into two zones, the European messaging zone and the Trans-Atlantic messaging zone.^[5] European Zone messages will be stored in the Netherlands and in a part of the Switzerland operating center, Trans-Atlantic Zone messages will be stored in the US and in a part of the Switzerland operating center that is segregated from the European Zone messages. Countries outside of Europe were by default allocated to the Trans-Atlantic Zone but could choose to have their messages stored in the European Zone.

SWIFTNet Network

SWIFT moved to its current IP Network infrastructure, known as SWIFTNet, from 2001 to 2005^[6], providing a total replacement of the previous X.25 infrastructure. The process involved the development of new protocols that facilitate efficient messaging, using existing and new message standards. The adopted technology chosen to develop the protocols was XML, where it now provides a wrapper around all messages legacy or contemporary. The communication protocols can be broken down into:

Architecture

SWIFT provides a centralized store-and-forward mechanism, with some transaction management. For bank A to send a message to bank B with a copy or authorization with institution C, it formats the message according to standard, and securely sends it to SWIFT. SWIFT guarantees its secure and reliable delivery to B after the appropriate action by C. SWIFT guarantees are based primarily on high redundancy of hardware, software, and people.

SWIFT Phase 2

During 2007 and 2008, the entire SWIFT Network migrated its infrastructure to a new protocol called SWIFT Phase 2. The main difference between Phase 2 and the former arrangement is that Phase 2 requires banks connecting to the network to use a Relationship Management Application (RMA) instead of the former Bilateral key exchange (BKE) system. According to SWIFT's public information database on the subject, RMA software should eventually prove more secure and easier to keep up-to-date; however, converting to the RMA system also meant that thousands of banks around the world had to update their international payments systems in order to comply with the new standards. RMA completely replaced BKE since 1.1.2009.

SWIFT interfaces

This article may be confusing or unclear to readers. Please help clarify the article; suggestions may be found on the talk page. (January 2009)

SWIFT provides turn-key solutions for members, consisting of linkage clients to facilitate connectivity to the SWIFT network and CBTs or 'computer based terminals' which members use to manage the delivery and receipt of their messages. Some of the more well-known interfaces and CBTs provided to their members are:

• SWIFTNet Link (SNL) - Software which is installed on the SWIFT customer's site and opens a connection to the SWIFTNet. Other applications can only communicate with the SWIFTNet through the SNL.
• Alliance Gateway (SAG) - SWIFT Software with various interfaces (e.g. RAHA = Remote Access Host Adapter), allowing other software products to use the SNL to connect to the SWIFTNet
• Alliance WebStation (SAB), desktop interface for SWIFT Alliance Gateway with several usage option:

1. administrative access to the SAG
2. direct connection the SWIFTNet via the SAG, in order to administrate SWIFT Certificates
3. so called Browse connection to the SWIFTNet (also via SAG) in order to use additional services, for example Target2

• Alliance Access (SAA) is the main messaging software by SWIFT, which allows message creation only for FIN messages, but routing and monitoring for FIN and MX messages. The main interfaces are FTA (files transfer automated, not FTP) and MQSA, a Websphere MQ interface.
• The Alliance Workstation (SAW) is the desktop software for administration, monitoring and FIN message creation. Since Alliance Access is not yet capable of creating MX messages, Alliance Messenger (SAM) has to be used for this purpose.
• Alliance Web Platform (SWP) as new thin-client desktop interface provided as an alternative to existing Alliance WebStation, Alliance Workstation (soon) and Alliance Messenger.

SWIFT services

There are four key areas that SWIFT services fall under within the Financial marketplace, Securities, Treasury & Derivatives, Trade Services and Payments & Cash Management.

SWIFTNet Mail

SWIFT also offer a secure person-to-person messaging service, SWIFTNet Mail, which went live on 16 May 2007.^[7] SWIFT clients can configure their existing email infrastructure to pass email messages through the highly secure and reliable SWIFTNet network instead of the open Internet. SWIFTNet Mail is intended for the secure transfer of sensitive business documents, such as invoices, contracts and signatories, and is designed to replace existing telex and courier services, as well as the transmission of security-sensitive data over the open Internet. Eight financial institutions, including HSBC, FirstRand Bank, Clearstream, DnB NOR, Nedbank, Standard Bank of South Africa and Bear Stearns, as well as SWIFT piloted the service.^[8]

Terrorist Finance Tracking Program

A series of articles published on June 23, 2006, by The New York Times, The Wall Street Journal and The Los Angeles Times revealed that the Treasury Department and the CIA, United States government agencies, had a program to access the SWIFT transaction database after the September 11th attacks called the Terrorist Finance Tracking Program.^[9]

After these publications SWIFT quickly came under pressure for scrutinizing data privacy of its customers by letting a foreign government agency access sensitive personal data. In September 2006, the Belgian government declared that the SWIFT dealings with U.S. government authorities were, in fact, a breach of Belgian and European privacy laws.^{[citation needed]} Additionally, U.S. government has submitted "useful" data to U.S. companies (manufacturer - customer relations, prices et al).

In response, SWIFT is in the process of improving its architecture to satisfy member privacy concerns by implementing the new Distributed Architecture with a two-zone model for storing messages (see Operations centers).

See also

• Bilateral key exchange and the new Relationship Management Application (RMA)
• Electronic money
• ISO 9362, the SWIFT/BIC code standard
• ISO 15022
• ISO 20022
• MA/CUG
• Organization for Economic Cooperation and Development (OECD)
• Routing transit number
• Value transfer system

References

External links

• Official SWIFT website
• SWIFT codes search
• SwiftCommunity.net, A community of people interested in SWIFT
• WIFE: Open Source Java based library for SWIFT messages processing
• SWIFT Formatting Guide
• EU concern at US data transfers BBC News 2007-01-31
• EU press release Swift Affair: European Data Protection Authorities joining efforts
• SIBOS - Annual SWIFT Conference