S.W.I.F.T.

What is SWIFT?

• The Society for Worldwide Interbank Financial Telecommunication ("SWIFT") operates a

worldwide financial messaging network. Messages are securely and reliably exchanged
between banks and other financial institutions.
• SWIFT also markets software and services to financial institutions, much of it for use on
the SWIFTNet Network.
• The majority of international interbank messages use the SWIFT network. As of April
2006 SWIFT linked almost 8000 financial institutions in 205 countries.

Formation of SWIFT
S.W.I.F.T. was formed when seven Major International Banks met in 1974 to discuss the
limitations of Telex as a means of secure delivery of payment and confirmation
information
Its headquarters are situated in La Hulpe, on the outskirts of Brussels
Who uses SWIFT?

Currently the following categories of organisation can access the service:

• Banks
• Trading Institutions
• Money Brokers
• Securities Broker Dealers
• Investment Management Institutions
• Clearing Systems and Central Depositories
• Recognised Exchanges
• Trust and Fiduciary Service Companies
• Subsidiary Providers of Custody and Nominees
• Treasury Counterparties
• Treasury ETC Service Providers
SWIFT OBJECTIVES
(1) Standardize Fund Transfer instructions among the participant
members;
(2) Immediate delivery of payment instructions and related
messages;
(3) Enhance the security levels of such fund transfers
(4) Reduce the cost of transmission of messages.
(5) Provide round the clock facilities across the world.
SERVICES OFFERED:

• SWIFT offers services and transactions essential for efficient

international banking operations such as:-
• (a) Customer and bank payments.
• (b) Credit/debit advices.
• (c) Statements.
• (d) Foreign exchange and money market confirmation.
• (e) Collections.
• (f) Documentary credits ( L/C).
• (g) Interbank securities trading.
• (h) Balance reporting.
• (i) Payment systems.
• (j) Travelers cheques.
• (k) Guarantees.
• (l) Cash Letters.
SWIFT Interface
• A Computer Based Terminal (CBT) (a.k.a. S.W.I.F.T. interface)
is then located at each user site. These terminals support the
connectivity to the local regional processor and facilitate both
manual entry of messages and the bridge to originating
applications.
• Some of the more well-known CBTs they provide to their
members;
– SWIFT Net Link (SNL).
– SWIFT Alliance Access/Entry (SAA/SAE)
– SWIFT Alliance Workstation (SAW)
– SWIFT Alliance Gateway (SAG)
– SWIFT Alliance Starter Set (SAS)
– SWIFT Alliance Web station (SAB)
– SWIFT Alliance Messenger (SAM)
SWIFT : Important Milestones
Year Event

1973 239 banks from 15 countries formed a co-operative to automate the telex. They called it
the “Society for Worldwide Interbank Financial Telecommunication”

1985 SWIFT starts using satellites for communication. The number of member banks has
grown to 1946 from 58 countries.

1987 SWIFT enters the “Securities” domain, by including broker dealers, exchanges,
depositories and clearing institutions in its network. The first BIC directory was
issued.

1996 SWIFT crosses the important milestone of 3 million messages per day

2001 SWIFTNet goes live and the migration from X.25 to IP begins.

2005 SWIFTNet
SWIFTNet migration
migration (Phase1)
(Phase1) successfullysuccessfully completed
completed and now and
there is more now
focus on there
InterAct,isFileAct
moreand
focus on
Browse
InterAct, FileAct and Browse
SWIFTNet
(Legacy) SWIFT SWIFTNet
 Old X.25 based network  New IP based network (private extranet)

 De-commissioned  All FIN subscribers migrated to new n/w

 Open only to banks and FIs  Open to banks, FIs, corporates, market
infrastructures and market data vendors

 Only legacy FIN format  XML messaging

 Primarily FIN traffic (MT 1xx, 2xx … 9xx)  Additional protocols (InterAct, FileAct, Browse)
SWIFT addresses
• S.W.I.F.T. addresses are used to not only indicate the final destination of the
message but to also indicate parties within the individual message.
• The term "S.W.I.F.T. address" actually only relates to a subset of Bank Identifier
Codes (BICs)
BIC/BEI/PIC (Bank Identifier Code / Business Entity Identifier / Partner Identification Code)
11 Char
4!a 2!a 2!c [3!c]
Bank Code Country Code Location Code Branch Code
Example: CITI GB 2L XXX
Can identify upto a branch within an institution
Limited use for legacy application to application communication
X.500 Distinguished Names:
Aimed at providing higher granularity and flexibility of names
The maximum permissible length of a DN is 100 characters
DNs are used for
Message routing - SWIFTNet uses the Addressing DNs to deliver the message to the appropriate SWIFTNet
Link.
Membership control - SWIFTNet verifies that the correspondents are allowed to send messages to each other
in the context of SWIFT.

Type of entity
Purpose of PKI
Mr. XYZ Registration & Certification Authorities that issue
bankus33
Expires: digital ‘certificates’
020802 - Certificates provide Trust in the identity of the
owner

Signing messages
- establish trusted identity of sender
- guarantees integrity of message
- sender cannot deny having created the message

Encrypting messages
- nobody but the receiver can read the message
Signing and encryption in practice
Sender Receiver
Sender’s Sender’s
Private signing key Public verification key

Signing

public storage

private private
storage storage

Encryption
Receiver’s Receiver’s
Public encryption key Private decryption key
 SWIFT
Connectivity
 SWIFT Connectivity
SWIFT participant 1

SWIFT
PoP Backbone
SWIFT participant 2
S
SS W
SWIFT participant n
Orange (E q u a
Orange (E q u a
n t) I
IP packet filtering PoP n t)
F
SNL
II T
SAB (C O L T)
Web server PoP (C O L T)

SWIFTNet
SWIFTNet PKI

Switch
VPN
Router PP
NAT device Firewall M-CPE (A(ATT&&TT) )

IP Security Tunnels NN
( BT I n f o n e
( BT I n f o n e
t)
SNL t)
PoP

SWIFT participant 3

SAG
SWIFT End-User responsibility SWIFT and Network Partner responsibility
SWIFTNet components
• SWIFTNet - SWIFTNet is an advanced IP-based messaging platform consisting of a
portfolio of products and services that enable secure and reliable communication of
mission-critical financial information and transactional data.

• SWIFTNet Link (SNL) - SWIFTNet Link is the mandatory network interface to SWIFTNet,
presenting a dynamically linked application programming interface (API) through which
business software solutions may access and use SWIFTNet services.

• SWIFTAlliance Gateway (SAG) - SWIFTAlliance Gateway is an interface product from

SWIFT that receives and concentrates messages from various applications before
passing them through SWIFTNet.

• SWIFTAlliance Webstation (SAB) - SWIFTAlliance WebStation is a SWIFTNet interface

product that is used for remote administration of the SWIFTAlliance Gateway, and for
administration of SWIFTNet certified operational entities. It also provides end-user
access to SWIFTNet business applications.

• SWIFTAlliance Access (SAA) - SWIFTAlliance Access is widely used FIN SID (a.k.a. CBT)
SWIFTAlliance Access is a multi-platform, multi-network interface product. It is designed
to connect single or multiple destinations to SWIFT, telex, fax and private networks.
SWIFTNet: Single platform for
multiple services
SWIFT Net
Services
SWIFTNet services
Securities Treasury and Cash Management Trade Services
Derivatives
SWIFTNet Bulk SWIFTNet Trade
SWIFTNet FIX SWIFTNet Payments Services Utility
Accord
SWIFTNet Data SWIFTNet Cash
Distribution SWIFTNet Reporting
Affirmations
SWIFTNet Funds SWIFTNet
SWIFTNet CLS Exceptions and
Third Party Investigations
Service
SWIFTNet Services

• SWIFTNet FIX
 Aimed towards the securities industry to offer transactions in FIX
messages by using SWIFTNet as the messaging infrastructure
 Provides a secure, reliable messaging service to seamlessly
exchange FIX messages with counterparties worldwide and thereby
 Precludes the heavy investments in the proprietary network
infrastructure to be maintained with various counterparts

• Funds
 Helps ensure maximized STP and straight-through reporting rates for
investors and their intermediaries (including distributors), fund
management companies and their respective Service Providers.

• Cash Reporting
 responds to the need to exchange real-time information on cash held
in accounts maintained at various counterparties .
SWIFTNet Services … contd.
• Bulk Payments
 to exchange bulk payment files .

• Exceptions and Investigations

 Aimed at automating payments-related enquiries
and to streamline the management process for
payment messages requiring manual intervention.
Request / Response exchange
SWIFTNet
Central Systems
• Real-time messaging
Request “Pay $5000”
client Ack server

• Store-and-forward Pull/Push

Put Message
ACK client server
client Acquire
pull push
Message mode mode

• Realtime Query/Response
Request “What is my balance?”
client Response “5000$” server
SWIFT : Messaging Protocols

Standard store-and-forward
FIN messaging for single instructions

Supports interactive exchange of files between

FileAct two parties (Real Time and store-and-forward)

Supports interactive message

InterAct exchange between two parties (Real Time and
store-and-forward)

https over SWIFTNet (Online information

Browse visualisation)
SWIFTNet FIN
FIN services are SWIFT's core store-and-forward messaging services . FIN is
a secure, reliable and resilient, access-controlled, structured store-and-
forward messaging service

• FIN services enable over 7,500 financial institutions in more than 200
countries to exchange financial data securely, cost effectively and
reliably.
• FIN value added services include:
– message validation to ensure SWIFT message formats
– delivery monitoring and prioritisation
– message storage and retrieval
– FIN COPY service (Y/T)
 SWIFTNet FileAct

FileAct provides a means for institutions in the financial community to securely

and reliably exchange files and information pertaining to those files over
SWIFTNet

FileAct supports:
Sending files to a SWIFTNet user (FileAct -- Put)
Retrieving files from a SWIFTNet user (FileAct -- Get)
Delivery notification confirming file receipt by a receiver
Abort of transfers in progress
File transfer state monitoring
Concurrent file transfers
Assurance of data authenticity and integrity
Closed user group control
SWIFTNet FileAct: Modes
and Usage
Typically used to reach
Store-and-
forward File a large number of
Transfer correspondents / or in
different time zone

lower-cost alternative to
Real-time store and forward for
File online Correspondents
Transfer (large banks/Market
infrastructures)

Real-time This is an interactive

query and service typically used to
response retrieve file in conjunction
with SWIFTNet Browse
SWIFTNet InterAct
SWIFTNet InterAct is SWIFT's xml based interactive messaging service
supporting the exchange of messages between two parties aimed at
improving STP while using SWIFTNet security features.

InterAct supports:
 Interactive exchange of messages in synchronous or asynchronous
mode
 Standard XML message envelopes
 Support of multiple services
 Support of closed user groups
 XML syntax validation
 Store and forward mode
 data integrity and authentication
 data confidentiality
SWIFTNet InterAct: Modes and
Usage
Typically used by major
Real-time
counterparties and/or
messaging
market infrastructures

Store-and- Typically used to reach

forward a large number of
messaging counterparties

Real-time Typically used in the

query and context of person-to-
response application solutions
(with SWIFTNet Browse)
SWIFTNet Browse
SWIFTNet Browse combines the user friendliness of web technology
with the security features offered by SWIFTNet. It enables
SWIFTAlliance Webstation to access web servers hosted over SWIFTNet

• Browse Features:
– Intended for User to Application communication
– Browsing Security (Authenticated using at least one InterAct
message)
– Can be used to initiate FileAct , InterAct messages
– Closed User Group Control
– Enhance existing online portals
– Create competitive advantage
SWIFT Net
Messages
SWIFT messages
MT0nn System Messages
• S.W.I.F.T. messages are
identified in a consistent MT1nn Customer Payments

manner. They all start MT2nn Financial Institution Transfers

with the literal "MT"
MT3nn FX, Money Market & Derivatives
which denotes Message
Type. This is then MT4nn Collections and cash letters

followed by a 3 digit MT5nn Securities Markets

number. For example:
MT6nn Precious Metals & Syndications

MT7nn Documentary Credits & Guarantees

MT8nn Travellers Cheques

MT9nn Cash Management & Customer Status

SWIFT message types
• SWIFT messages consist of five blocks of data including
three headers, message content, and a trailer.
• Each message is assigned unique identifiers. A 4-digit
session number is assigned each time the user logs in.
Each message is then assigned a 6-digit sequence
number. These are then combined to form:
– ISN (Input Sequence Number)
or
– OSN (Output Sequence Number)
• The Logical Terminal Address (12 character BIC), Day,
Session and Sequence numbers combine to form:
– MIR (Message Input Reference)
or
– MOR (Message Output Reference)
SWIFT field structure

• A field is a logical subdivision of a message block

• A field is always prefaced by a field tag that
consists of two digits followed by an alphabetic
character (optional).
• The alphabetic character is referred to as an
option.
– For example, 16R is a tag (16) with an option (R) that
indicates the start of a block;
• A field is always terminated by a field delimiter.
Generic and Non-generic Fields
• There are two types of fields used in SWIFT
messages: generic and non-generic.
• The type of field used in a SWIFT message
block is determined by the Message Type.
– The structure of non-generic fields in SWIFT
message blocks is as follows:
:2!n[1a]: data content<CRLF>
– The structure of generic fields in SWIFT messages
is as follows:
:2!n1a::4!c’/’[8c]’/’data content
SWIFT message block structure - Web Sphere

• The connector supports SWIFT Financial Application

(FIN) messages. They have the following structure:
– {1: Basic Header Block}
– {2: Application Header Block}
– {3: User Header Block}
– {4: Text Block or body}
– {5: Trailer Block}
• These five SWIFT message blocks include header
information, the body of the message, and a trailer.
• All blocks have the same basic format: {n:...}
{1: Basic Header Block}
• The basic header block is fixed-length and
continuous with no field delimiters. It has the
following format:

{1: F 01 BANKBEBB 2222 123456}

(a) (b) (c) (d) (e) (f)
{2: Application Header Block}
• There are two types of application headers:
– Input and Output.
• Both are fixed-length and continuous with no field
delimiters.
• The input (to SWIFT) structure is as follows:
{2: I 100 BANKDEFFXXXX U 3 003}
(a) (b) (c) (d) (e) (f) (g)
{3: User Header Block}
• This is an optional block and has the following
structure:

{3: {113:xxxx} {108:abcdefgh12345678} }

(a) (b) ( c)
{4: Text Block or body}
• This block is where the actual message content is specified
and is what most users see.
• The format, which is variable length and requires use of CRLF
as a field delimiter, is as follows:
– {4:CRLF
– :20:PAYREFTB54302 CRLF :32A:970103BEF1000000,CRLF
– :50:CUSTOMER NAME CRLF
– AND ADDRESS CRLF
– :59:/123-456-789 CRLF
– BENEFICIARY NAME CRLF
– AND ADDRESS CRLF -}
• The symbol CRLF is a mandatory delimiter in block 4.
{5: Trailer Block}
• A message always ends in a trailer with the following
format:
• {5: {MAC:12345678}{CHK:123456789ABC}
• MAC Message Authentication Code
• CHK Checksum calculated for all message types.
• PDE Possible Duplicate Emission
• DLM Added by SWIFT if an urgent message (U) has not
been delivered within 15 minutes, or a normal message
(N) within 100 minutes.
 Business
Objects for
SWIFT
Overview of business objects for SWIFT
Business objects
• Each of these business objects consist of the following:
• Name
• Version
• Attributes
• Verbs
– Each business object supports the following standard verbs:
– Create
– Retrieve
Converting business objects to SWIFT
messages
• To convert a business object to a SWIFT
message, the SWIFT data handler loops through
the attributes in the top-level business object in
sequential order.
• It generates populated blocks of a SWIFT
message recursively based on the order in which
attributes appear in the business object and its
children.
• Attributes without a block number, or with values
unrecognized by the parser properties, are
ignored.
• Also ignored is block 0, the UUID header that is
added by the MQSA.
Converting SWIFT messages to
business objects
The SWIFT data handler extracts data from a SWIFT
message and sets corresponding attributes in a
business object as follows:
1. The SWIFT parser is called to extract the first 4
blocks (UUID + blocks 1 through 3). For block 2,
the SWIFT application header, only the input
attributes are extracted.
2. The SWIFT data handler is called to extract the
name of the business object from block 2 of the
SWIFT message.
3. The SWIFT data handler creates an instance of
the top-level object.
BENEFITS OF SWIFT:
• Standardized procedure for transfer of funds
• Higher speed in transmission of messages
• Reduced cost in transmission of messages
• High level of security in transfer of funds
• Retrival of old messages
• SWIFTNet Investment so far…
– Finished migrating FIN traffic to SWIFTNet
– Few banks have implemented few tactical FileAct/InterAct
solutions to satisfy market mandate

• Challenges for Banks / F.Is

– To Increase ROI from SWIFTNet investment
– Centralisation and standardization for FileAct/InterAct traffic
– Mandatory SWIFTNet Phase II : RMA implementation
– Getting ready for increased SWIFTNet traffic
– Message standardisation (XML/ISO20022)
– Implementation of SWIFT’s business solutions
– Enhance portfolio of services/offerings over SWIFTNet
Threats to the SWIFT Network
• The threats most likely
to affect the SWIFT
Network are money
laundering and other
forms of electronics
fraud.
Thank You