1. THE NEED FOR SWIFT SANCTION SCREENING SERVICE ADOPTION IN NIGERIA
Being Presentation to CCCO OF BANKS IN NIGERIA By
Mr. Dipo Fatokun
Director, Banking and Payment System Department
Central Bank of Nigeria
NOVEMBER 2014
Payment Systems Vision 2020

2. Payment Systems Vision 2020
OUTLINE
Introduction/Justification
Benefits
CBNs Role
Milestones
Next Steps
Community Deal
What is the role of CCCO?
Q & A
NOVEMBER 2014
Payment Systems Vision 2020

3. Payment Systems Vision 2020
INTRODUCTION
Payment Systems Vision (2020) was initiated in 2007 by the Central Bank of Nigeria.
The PSV 2020 strategy document was reviewed in 2013.
The revised strategy document was launched at the ICPS held in September, 2013.
The major outcome of the Conference was the 7 Key recommendations to transform the National Payment System.
One of the recommendation was the adoption of SWIFT Sanction Screening.
7 Key Recommendations
Recommendation 1 – CBN should state a policy that no payment system would invoke the principle of ‘unwind’
As a guiding principle, the process of unwind should not be allowed within any Nigeria domestic payment system
Recommendation 2 - CBN should signal its intent to move, at an appropriate pace and in an appropriate timeframe, to a ‘Survivor Pays’ model for all payment schemes
Simpler to enforce for RTGS payment system since payment requests are validated against real-time net positions (end 2016)
Deferred Net Settlement systems are more challenging since, in most cases, net positions are only known once clearing cycle is complete. (end 2019)
Recommendation 3 - Strengthen Scheme governance structure
Governance must reflect the significantly greater responsibility of scheme management, covering all aspects of risk, business management and operational resilience
Recommendation 4 – Review against PFMI
Each Scheme Management Board must complete an annual self-assessment against the CPSS/IOSCO Principles for Financial Market Infrastructure (PFMI).
An independent review should be undertaken every four years, with the target to make the results publically available by end 2017
Recommendation 5 – CLS (Continuous Linked Settlement)
CBN should engage with CLS to commence the process of Naira becoming a CLS Settlement currency which would result in reduced settlement risk for FX transactions.
Admission to CLS as a currency in the FX Settlement process is a multi-year process
Recommendation 6 - SWIFT Sanctions Screening service
CBN should advise (or mandate) all banks to use SWIFT Sanction Screening or similar service) for all international payments sent via Correspondent Banks
The objective is to improve the quality of international payments at the point of origination. Currently Sanctions Screening is performed by the correspondent bank and is not visible to the originating bank.
Additional Action – BIS Committee for Payment and Settlement Systems
CBN should approach the Bank for International Settlements to request participation in the Committee for Payment and Settlement Systems (CPSS) which is regarded as the authoritative body on best practice for payment systems
Based on the approval of the management of the CBN, engagements were made with
Bankers committee
SWIFT
Financial Institutions
Other Non-bank payment service providers.
NOVEMBER 2014
Payment Systems Vision 2020

4. Payment Systems Vision 2020
INTRODUCTION CONT’D
Other recommendations are:
No payment system would invoke the principle of ‘unwind’.
A move to ‘Survivor Pays’ model for all payment schemes.
Strengthen the scheme governance structure.
Payments schemes should be reviewed against the Principle for Financial Market Infrastructure (PFMI).
That the Naira become a CLS settlement currency.
That CBN become member of the BIS committee for Payment and Settlement systems.
July 2014
Payment Systems Vision 2020

5. Payment Systems Vision 2020
BENEFITS
To improve the integrity of Financial transactions originating from Nigeria.
To enhance industry compliance of AML/CFT.
Regulatory scrutiny and enforcement of sanction policies is enhanced.
Available screening solutions is made simple and cost effective.
The challenges for low-volume Financial institutions is reduced.
Provision of a centralized SSS
NOVEMBER 2014
Payment Systems Vision 2020

6. CENTRAL BANK OF NIGERIA’s ROLE
Providing Co-ordination
Negotiating with service providers and acting as a liaison between SWIFT and the Financial institutions/user community in Nigeria.
Ensuring adoption and compliance.
NOVEMBER 2014
Payment Systems Vision 2020

7. Milestone 1
Successfully negotiated the price of the SWIFT SSS with a community deal
Milestone 2
Briefing of the Bankers sub-committee on payment systems
Milestone 3
Briefing of the Bankers committee
Milestone 4
Tripartite information session on SSS between SWIFT, CBN and Financial Institutions
MILESTONES
A circular on the implementation of SWIFT SSS was issued on 20th November, 2014

8. Payment Systems Vision 2020
NEXT STEPS
Send Sanction Screening proposal to banks including configuration and training plan by November 27th, 2014.
Subscribe to SWIFT Sanction Screening Service by
December 1st, 2014.
Configuration and Training
Off-site training on January 12th, A SWIFT consultant is expected to spend one day with all the banks together for a general training course then half a day (or more) with each bank to get them started.
Implement SWIFT Sanction Screening Service on or by January 31st, 2015.
Project Plan - Sanctions Screening Nigeria
Deliverables Who When Status
Before Implementation SWIFT to send CBN a Configuration& Training proposal SWIFT (Samir) October 16th
Inform the banks to subscribe to SSS before December 1st 2014 CBN SSS Committee First week of November
"Ask each bank to assign a project owner/point of contact for the SSS projectTo be communicated to Samir " CBN SSS Committee First week of November
Send Sanctions Screening proposal to banks including Configuration&Training SWIFT or CBN SSS Committee? Second week of November
Inform the banks about the Configuration&Training plan CBN SSS Committee First week of November
Find a location and set a date for the general training CBN SSS Committee Second week of December (at the latest)
Invite the banks to the general training on January (TBC) CBN SSS Committee Second week of December
Send "next steps" to each bank SWIFT (Samir) After each subscription
Send Pre-requisites document (checklist) to the each bank project owners SWIFT Consultant Second week of December
Assist the banks to be ready for implementation based on Pre-requisites SWIFT Consultant First week of January (at the latest)
Plan 1/2 day for individual training with each bank SWIFT Consultant Second week of December
Implementation For more details, please refer to attached proposal General Training at CBN SWIFT Consultant + CBN SSS Committee January 12 (TBC)
1/2 day session for individual training per bank SWIFT Consultant/Partner (TBC) From January 12 to January 21
After implementation Session with each bank for follow-up SWIFT Consultant From 22 January until Go Live
NOVEMBRER 2014
Payment Systems Vision 2020

9. Payment Systems Vision 2020
COMMUNITY DEAL
Pricing
Annual Subscription Fee : (6,250 EUR down from 12,500 EUR)
System maintenance
Lists update
System Maintenance
Lists Update
Training cost is Eur per bank.
NOVEMBER 2014
Payment Systems Vision 2020

10. Payment Systems Vision 2020
COMMUNITY DEAL CONT’D
Transaction Fee through traffic aggregation negotiated
NOVEMBER 2014
Payment Systems Vision 2020

11. WHAT IS THE ROLE FOR CCCO?
Ensure that the respective banks nominate a Project Manager to represent their institutions.
Ensure early adoption, in line with the timeline.
Ensure compliance.
NOVEMBER 2014
Payment Systems Vision 2020

12. Payment Systems Vision 2020
CONCLUSION
We implore the Committee of Chief Compliance Officers of banks in Nigeria to drive the adoption of SWIFT Sanction Screening Service in their respective banks.
July 2014
Payment Systems Vision 2020

13. Payment Systems Vision 2020
Q & A
NOVEMBER 2014
Payment Systems Vision 2020