Market Practice Guidelines for use of field 50a, Ordering Customer to comply with FATF SR VII (Version 1.8, June 2010)

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1 Market Practice Guidelines for use of field 50a, Ordering Customer to comply with FATF SR VII (Version 1.8, June 2010) Note: Relevant regulations and any applicable legislation take precedence over the guidance notes issued by this body. These Guidelines represent an industry s best effort to assist peers in the interpretation and implementation of the relevant topic(s). The PMPG - or any of its Members - cannot be held responsible for any error in these Guidelines or any consequence thereof. 1. Introduction The Payments Market Practice Group (PMPG) is an independent body of payments subject matter experts from Asia Pacific, Europe and North America. The mission of the PMPG is to: take stock of payments market practices across regions, discuss, explain, and document market practice issues, including possible commercial impact, recommend market practices, covering end-to-end transactions, propose best practice, business responsibilities and rules, message flows, consistent implementation of ISO messaging standards and exception definitions, ensure publication of recommended best practices, recommend payments market practices in response to changing compliance requirements The PMPG provides a truly global forum to drive better market practices which, together with correct use of standards, will help in achieving full STP and improved customer service. This document has three main sections: Market Practice Guidelines: Describes the guidelines that the PMPG proposes to the global payments community. Frequently Asked Questions: Addresses specific questions that have been raised to the PMPG in relation to the subject that is addressed in the document. Observations and Recommendations: Comments on the general impact of the guidelines and areas of further discussion. The text starts by giving the background and contains a glossary at the end. The PMPG will regularly review these guidelines, using the frequently asked questions and community feedback as input.

2 2. Background FATF SR VII sets out specifications for the inclusion of ordering customer information in payment instructions. As FATF SR VII is adapted in markets around the world, it is important to maintain efficiency in the payments infrastructure and in the service banks provide to their clients. The development of guidance for the structuring of ordering customer information in Field 50a (where a means that multiple option letters are available) of a SWIFT MT 103 message will provide a reference document for use by instructing banks to insure that their payment instructions are in compliance with regulations in other markets. 2

3 3. Market Practice Guidelines (MPG) for the use of field 50a, Ordering Customer to comply with the FATF SR VII MPG FATF SR VII #1: Underlying guiding principles Only Field 50a is to be used for ordering customer information. Ordering customer information should not be included in Fields 20, 52a, 70 or 72. If the account number of the ordering customer is present, it must be stated in the account or party identifier line, preceded by a slash. Field 50a Options and Usage Guidelines Field 50a has three options A, F and K. The formats for the three options are: Option A Option F Option K [/34x] 4!a2!a2!c[3!c] 35x 4*35x [/34x] 4*35x (Account) (BIC) (Party Identifier) (Name & Address) (Account) (Name & Address) MPG FATF SR VII #2: The use of field 50a with Option A 50A is appropriate when the ordering customer is a corporation with a non-financial institution Business Identifier Code (non-financial institution BIC) assigned to it. The second scenario where 50A is appropriate is when a bank makes payments on its own behalf and the bank s Business Identifier Code (financial institution BIC) is used as the identifier. The BIC must be a SWIFT registered address, either connected or non-connected. Option A Usage Line 1 must include the account number of the ordering customer. If no account number is available, then Line 1 must carry a unique identifier, for example, tax-id, preceded by a slash. Line 2 must include the BIC of the ordering customer. Option A Example :50A:/SE VWVOSES1 3

4 MPG FATF SR VII #3: The use of field 50a with Option F Field 50F provides the possibility to clearly structure the ordering customer information and for validation by networks and processing applications. For this reason, in absence of a BIC, it is the preferred option. Validation is as follows: Subfield 1 (Party Identifier) must be present and must start with either a slash (Account option) or with a code of a restricted list (Identifier option). Subfield 2 (Name&Address) must be present. All lines must start with a number between 1 and 8 followed by a slash. As the subfield is mandatory, at the minimum one line must be present in line with that format. Overall this means that the minimum for field 50F is 2 lines. In option F, for Line 1, one of the following line formats must be used: Line 1 (subfield Party Identifier) /34x (Account) Or Line 1 (subfield Party Identifier) 4!a/30x (Code)(Identifier) When subfield 1 Party Identifier is used with the Code/Identifier format, one of the following codes must be used: ARNU CCPT CUST DRLC EMPL NIDN SOSE Alien Registration Passport Customer Identification Driver's License Employer National Identity Social Security ISO country code, a slash, '/' and the Alien Registration. ISO country code, a slash, '/' and the Passport. ISO country code of the issuer of the number, a slash, '/', the issuer of the number, a slash, '/' and the Customer Identification. ISO country code of the issuing authority, a slash, '/', the issuing authority, a slash, '/' and the Driver's License. ISO country code of the registration authority, a slash, '/', the registration authority, a slash, '/' and the Employer. ISO country code, a slash, '/' and the National Identity. ISO country code, a slash, '/' and the Social Security. 4

5 TXID Tax Identification ISO country code, a slash, '/' and the Tax Identification. In option F, for Lines 2-5, the following line format must be used: Lines 2-5 (subfield Name & Address) 1!n/33x ()(Details) In option F, each line of subfield 2 Name & Address - when present - must start with one of the numbers found in the chart below. 1 Name of the ordering customer The number followed by a slash, '/' must be followed by the name of the ordering customer (where it is recommended that the surname precedes given name(s)). 2 Address Line The number followed by a slash, '/' must be followed by an Address Line (Address Line can be used to provide for example, street name and number, or building name). 3 Country and Town The number followed by a slash, '/' must be followed by the ISO country code, a slash '/' and Town (Town can be complemented by postal code (for example zip), country subdivision (for example state, province, or county). 4 Date of Birth The number followed by a slash, '/' must be followed by the Date of Birth in the YYYYMMDD format. 5 Place of Birth The number followed by a slash, '/' must be followed by the ISO country code, a slash '/' and the Place of Birth. 6 Customer Identification 7 National Identity 8 Additional Information The number followed by a slash, '/' must be followed by the ISO country code of the issuer of the number, a slash, '/', the issuer of the number, a slash, '/' and the Customer Identification. The number followed by a slash, '/' must be followed by the ISO country code, a slash, '/' and the National Identity. The number followed by a slash, '/' is followed by information completing the Identifier provided in subfield 1 (Party Identifier) used with the (Code)(Identifier) format. In option F, subfield 2 Name & Address: Each number must appear on a separate line. The first line must start with number 1. s must appear in numerical order. Only numbers 1 and 2 may be repeated if more than one line is needed to provide the information indicated by that number for example 2 lines for address details. 2 must not be used without number 3. 4 must not be used without number 5 and vice versa. The use of number 8 is only allowed in the following instances: 5

6 Option F Usage o to continue information on the Identifier of the ordering customer provided in subfield 1 (Party Identifier) used with the (Code)(Identifier) format. o to continue information on the Customer Identification provided in subfield 2 (Name & Address) following number 6. o to continue information on the National Identity provided in subfield 2 (Name & Address) following number 7. The preference for Line 1 is to fill the Party Identifier with the account number of the ordering customer, preceded by a slash. If no account number is available, then this line must carry a unique identifier of the ordering customer in line with the format specifications for the Line 1 Code/Identifier option. Line 2 must carry the name of the ordering customer. The preference for Lines 3-5 is to provide the ordering customer s address as follows. If no address details are available, then the date and place of birth of the ordering customer or a unique customer identification number or a national identity card number of the ordering customer must be provided. For option F this means that the preferred usage is: Line 1: /Account Line 2: 1/Name of the ordering customer Line 3: 2/Address details Line 4: 3/Country code/town Option F Examples Example 1 PREFERRED: account number with name, address and country code/city :50F:/ /SMITH JOHN 2/299, PARK AVENUE 3/US/NEW YORK, NY Example 2: account number with name and date and place of birth :50F:/BE /PHILIPS MARK 4/ /BE/BRUSSELS Example 3: coded identification with name, address and country code/city :50F:DRLC/BE/BRUSSELS/NB /DUPONT JACQUES 2/HIGH STREET 6, APT 6C 3/BE/BRUSSELS 6

7 Example 4: coded identifier with name and customer number :50F:NIDN/DE/ /MANN GEORG 6/DE/ABC BANK/ MPG FATF SR VII #4: The use of field 50a with Option K Option K is used to provide ordering customer information, in a less structured format. Correct use of option K is an acceptable means of complying with FATF recommendations. Option K Usage Line 1 must include the account number of the ordering customer, preceded by a slash. If no account number is available, then Line 1 must carry a unique identifier, preceded by a slash. Line 2 must carry the name of the ordering customer. Lines 3-5 are for address details of the ordering customer in line with the generic format specifications for a 4*35x field. Option K Examples :50K:/BE DUPONT MARTIN AVENUE DU LAC BRUSSELS - BE :50K:/ BIODATA GMBH HOCHSTRASSE, ZURICH SWITZERLAND 7

8 4. Frequently Asked Questions Q1: Who is the ordering customer in field 50a? A: It is the account owner as specified in the ordering institution s books. If more information has to be passed on (for example, on behalf of party, subsidiary, etc...) it should be transported in field 70. Q2: Is it acceptable if my applications only support the preferred option F for field 50a? A: For inbound payments, all 3 options have to be supported. For outbound payments, the ordering institution decides which options to support. Q3: Should the same rules apply to beneficiary information? A: FATF SR VII applies to ordering customers only. There has been no request from FATF yet, to have the similar structure for field 59a Beneficiary Customer. However, based on amendments to Canada s Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC (Canada s Financial Intelligence Agency) has implemented new regulations regarding cross border wire transfers effective June 23, These new regulations require additional identifying information for the beneficiary customer of a payment. The Canadian regulation requires the beneficiary s full name, full address and account number (if applicable) for payments sent via SWIFT. We recommend applying the formatting guidelines as described in this document for the ordering customer under MPG #2 (field 50A) and MPG #4 (field 50K) to the beneficiary customer (field 59A and 59): Option 59A This option is appropriate when the beneficiary is a corporation with a non-financial institution Business Identifier Code (non-financial institution BIC) assigned to it or when a bank is the beneficiary of a commercial payment and the bank s Business Identifier Code (financial institution BIC) is used as the identifier. The BIC must be a SWIFT registered address, either connected or non-connected. Usage: Line 1 must include the account number of the beneficiary customer. If no account number is available, then Line 1 must carry a unique identifier, for example, tax-id, preceded by a slash. Line 2 must include the BIC of the beneficiary customer. Example: :59A:/SE VWVOSES1 Option 59 This option is used to provide beneficiary customer information in a less structured format. 8

9 Usage: Line 1 must include the account number of the beneficiary customer, preceded by a slash. If no account number is available, then Line 1 must carry a unique identifier, preceded by a slash. Line 2 must carry the name of the beneficiary customer. Lines 3-5 are for address details of the beneficiary customer in line with the generic format specifications for a 4*35x field. Examples: :59:/BE DUPONT MARTIN AVENUE DU LAC BRUSSELS - BE :59:/ BIODATA GMBH HOCHSTRASSE, ZURICH SWITZERLAND Q4: How do I specify the address if there are no streets or street numbers involved? A: There are exceptional cases where no street name or number is available. If a street number is missing, then the street name must be combined with the town and country. In case of field 50F, this means that Name&Address field must carry: the name of the ordering customer (on the first line(s) after "1/"), the street name (on the next line after "2/") and the ISO country code, a slash and the town (on the next line after "3/"). If the street name is missing, and an alternative for the street name (for example, a P.O. Box) is available, then it must be given in combination with the town and country. In case of field 50F, this means that Name&Address field must carry: the name of the ordering customer (on the first line(s) after "1/"), the alternative information (on the next line after "2/") and the ISO country code, a slash and the town (on the next line after "3/"). Note that Australian AML/CTF legislation is strict in its requirement that a payer's full business or residential address not be a P.O. Box. Accordingly, any inbound message to Australia containing a P.O. Box might be queried, delayed or rejected. If the street name is missing, and no alternative for the street name is available, then field 50F, the Name&Address field must carry: the name of the ordering customer (on the first line(s) after "1/"), the ISO country code, a slash and the town (on the next line after "3/"). If this is done, it should be clear that the identification of the person and the country/town are sufficient to uniquely identify the ordering customer. 9

10 Note: A recommendation to further validate the formatting of field 50F has been accepted in the SWIFT Standards Release 2009 country vote. The SWIFT network will validate additional formatting rules, in line with the description under MPG #3. Q5: If FATF SR VII only specifies the need to include ordering customer information, why do some jurisdictions rely on SR VII to request additional information? A: Some jurisdictions are using a broader interpretation of FATF SR VII recommendations, and they are requesting additional information on the beneficiary of a payment. Absent specific compliance requirements on what level of beneficiary information must accompany a payment instruction, the guidelines for Field 59a Beneficiary Customer contained in the SWIFT User Handbook should prevail. Q6: How do I specify a name longer than 35 characters? A: In certain regions the name of the ordering customer indeed does not fit onto a single line of an MT Name&Address field with format 4*35x. This length issue has been addressed in the ISO payments messages where the name has been extended to 140 characters. In the meantime, there are several options to cater for long names. For a field 50K, the name can be continued on a second line of the 4*35x field. :50K:/BE SHOE SHINE IMPORT AND EXPORT ZANG MI TRADING CORPORATION AVENUE DU LAC BRUSSELS BE However, the second line in the example above might not be recognized as continuation of the name. This issue can be solved by using field 50 F where the information on the ordering customer is structured by using numbers at the beginning of each line of the field. A number 1 followed by a slash is used to indicate that what follows is the name of the ordering customer. As certain numbers may be repeated if more than one line is needed to provide the information, by repeating number 1 on several lines, one can indicate that the name of the ordering customer is continued. When using 50F, the same example becomes: :50F:/BE /SHOE SHINE IMPORT AND EXPORT 1/ZANG MI TRADING CORPORATION 2/AVENUE DU LAC 26 3/BE/BRUSSELS/

11 5. Observations and Recommendations 1. These PMPG Guidelines are globally applicable. Guidelines on how to comply with SR VII have also been published by The Financial Action Task Force - FATF (as of page 70 in the document and for the members of the International Financial Services Association IFSA. 2. At EU level, the Regulation (EC) No 1781/2006 has a derogation for transfers of funds within the Community allowing for a unique identifier /account number instead of full details. 11

12 6. Glossary This document and other information are available on the PMPG website: 12