Banks should provide more detailed information on parties involved in cover payment transactions once a new interbank messaging system is implemented in the fall, according to an international banking committee. The payments, which are made in currencies other than those of payers' and payees' countries, involve third-party banks that process the transactions in separate jurisdictions, often without complete details on the payments' originators and beneficiaries, the Switzerland-based Basel Committee on Banking Supervision said Tuesday. Current messaging between financial institutions doesn't allow intermediary banks to easily share more information on cover payments, though the Belgium-based Society for Worldwide Interbank Financial Telecommunications,...
The contiguous stretch of land from Iraq to Tajikistan remains one of the riskiest geographies for financial institutions shielding themselves from money launderers and terrorist financiers, according to a Swiss nonprofit organization.
In a congressional hearing last May, sanctions experts outlined how gaps in U.S. and EU blacklists could let designated Iranians and other designees exploit the American banking system. But the witnesses failed to point out one important loophole in international sanctions: interbank cover payments.
For all of the concern over the money laundering risks associated with cover payments and cross-border transactions, there is a simple solution: more transparency, according to an anti-money laundering compliance director.
The Wolfsberg Group and Clearing House Association called for banking cooperative Society for Worldwide Interbank Financial Telecommuncation to change the payment instructions it handles to "promote the effectiveness of global anti-money laundering and anti-terrorist financing programs."