Society for Worldwide Interbank Financial Telecommunication


Society for Worldwide Interbank Financial Telecommunication

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, and ISO 9362 bank identifier codes are popularly known as "SWIFT codes".

The majority of international interbank messages use the SWIFT network. As of December 2007 SWIFT linked 8,332 financial institutions in 208 countries. [cite news|title=SWIFTNet FIN traffic December 2007|url=http://www.swift.com/index.cfm?item_id=65436|publisher=SWIFT|date=2008-01-23] SWIFT does not facilitate funds transfer. Financial institutions would need a corresponding banking relationship for financial transactions.huh 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.

It was founded in Brussels in 1973, supported by 239 banks in 15 countries. It started to establish common standards (See SWIFT 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.

Operations centers

SWIFT operates a US data center. This center is one of two that share information in near real-time to provide a active-active redundancy capability.huh Both Centers provide redundancy for/in takeover situations. Each Center site, in turn, has it own redundancy in a readiness state Active-Hot Standby structure. Redundancy is embedded in the SWIFT network architectural design.

WIFT interfaces

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)
* Alliance Gateway (SAG) and Alliance Starter Set (SAS) as communication interfaces
* Alliance WebStation (SAB) as desktop interface for Alliance Gateway/Starter Set
* Alliance Access (SAA), Alliance Entry (SAE) and Alliance RMA (SAR) as messaging interfaces
* Alliance Workstation (SAW) and Alliance Messenger (SAM) as desktop interfaces for Alliance Access/Entry
* Alliance Web Platform (SWP) as new thin-client desktop interface provided as an alternative to existing Alliance WebStation, Alliance Workstation (soon) and Alliance Messenger. Interfaces are also provided by certified SWIFT Service Bureaux that provide connectivity to FIN and other SWIFT services.

WIFT services

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

SWIFT also offer a secure person-to-person messaging service, SWIFTNet Mail, which went live on 16 May 2007. [ [http://www.swift.com/index.cfm?item_id=61929 SWIFTNet Mail now available] ] 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. [ [http://www.swift.com/index.cfm?item_id=61132 SWIFTNet Mail pilot phase underway] ]

WIFTNet Network

SWIFT moved to its current IP Network infrastructure, known as SWIFTNet, in 2003, 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:

InterAct FileAct Browse

* SWIFTNet InterAct Realtime
* SWIFTNet InterAct Store and Forward

* SWIFTNet FileAct Realtime
* SWIFTNet FileAct Store and Forward

* SWIFTNet Browse

Architecture

Basically, 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.

WIFT Phase 2

Throughout 2007, the entire SWIFT Network will be switching its infrastructure to a new protocol called SWIFT Phase 2. The main difference between Phase 2 and the current arrangement is that Phase 2 will require banks connecting to the network to use a Relationship Management Application (RMA) instead of the present 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 means that thousands of banks around the world will have to update their international payments systems in order to comply with the new standards.

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. [cite news|title=Belgian PM: Data Transfer Broke Rules|url=http://www.washingtonpost.com/wp-dyn/content/article/2006/09/28/AR2006092800585.html|publisher=Washington Post|date=2005-09-28]

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.Fact|date=May 2008

In response, SWIFT is in the process of improving its architecture to satisfy member privacy concerns.

ee also

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

References

External links

* [http://www.swift.com/ Official SWIFT website]
* [https://www.swiftcommunity.net/ SwiftCommunity.net] - A community of people interested in SWIFT
* [http://wife.sf.net/ WIFE: Open Source Java based library for SWIFT messages processing]
* [http://www.swift.com/bsl/freequery.do SWIFT codes search]
* [http://www.ubs.com/1/ShowMedia/bank_for_banks/offering/download?contentId=28371&name=SWIFT_ForGuiMee_e4GzD.pdf SWIFT Formatting Guide]
* [http://commons.wikimedia.org/wiki/
]
* [http://news.bbc.co.uk/2/hi/europe/6315893.stm EU concern at US data transfers] BBC News 2007-01-31
* [http://ec.europa.eu/justice_home/fsj/privacy/news/docs/PR_Swift_Affair_28_07_06_en.pdf EU press release Swift Affair: European Data Protection Authorities joining efforts]


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