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Cover payments – a real pain?

A while ago, I talked about cover payments and the introduction of the changes to SWIFT MT202 message types.  A wee bit technical for the blog, but worth it as the costs of implementation of the changes were, and are, a major concern for the banks I deal with.

Today, a press release landed in my inbox.  Usually the "Delete" button is reached before I even notice the title of such releases, but this one intrigued me:

"SWIFT's MT202 COV Led to More Work, Data Quality Concerns – Dow Jones Survey"

Hmmm … what's all this about then?  On reading, it's all about a small – just over 50 – group of bankers saying: "yes, MT202 COV is a pain".

"The majority (60 percent) of compliance and payments industry executives believe the new SWIFT cover payments rule
MT202 COV raised the standard of sanctions compliance …

Dow Jones1

… but many also credit it with increased workloads and costs as well as mounting concerns over duplicate alerts and data quality, according to surveys conducted by Dow Jones.

Roughly half (49 percent) of survey respondents experienced an increase in workload following the introduction of MT202 COV while 39 percent said their costs of compliance increased. 

Dow Jones3

The rising costs come as 51 percent of respondents expect their budgets to be stagnant over the next year.

When respondents were asked to rank their level of concern regarding key issues when screening wire transfer messages, their concern rose across the board after MT202 COV took effect. Data quality saw the biggest jump as 41 percent were “very” or “extremely” concerned about this issue before MT202 COV, but 62 percent said the same after the rule took effect.

Dow Jones2

Concern about a high number of duplicate alerts also jumped significantly as 47 percent of respondents identified this as an issue after MT202 COV took effect, compared to 30 percent before the rule was implemented.

Dow Jones4

Dow Jones conducted two surveys to measure the impact of MT202 COV, which took effect in November 2009. The first survey, conducted from Aug. 31, 2009 to Sept. 9, 2009, received 52 responses and the second survey, conducted from March 23, 2010 to April 6, 2010, received 53 responses.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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