The majority of compliance and payments industry executives believe the new Swift cover payments rule MT202 COV has raised the standard of sanctions compliance but many also credit it with increased workloads and costs, according to surveys from Dow Jones.
MT202 COV was introduced in November in a bid to improve transparency and keep payments messages in line with regulatory demands related to anti-money laundering and the fight against terrorist funding.
According to two polls with over 50 responses - one before MT202 COV's introduction and one after - 60% of industry executives think it has succeeded in raising the standard of sanctions compliance.
However, roughly half of respondents have experienced an increase in workload while 36% say their costs of compliance increased. The rising costs come as 51% expect their budgets to be stagnant over the next year.
Rupert de Ruig, MD, risk and compliance, Dow Jones, says: "Greater transparency in payment origination led to a significant increase in the number of payments subject to sanctions regimes. Without a corresponding budget increase, compliance departments must employ more efficient processes and technologies to minimise the impact without increasing risk."
When respondents were asked to rank their level of concern regarding key issues when screening wire transfer messages, their anxieties rose across the board after MT202 COV took effect. Data quality saw the biggest jump, with 41% "very" or "extremely" concerned about this issue before MT202 COV, rising to 62% after the rule took effect.
Concern about a high number of duplicate alerts also jumped significantly with 47% of respondents identifying this as an issue after MT202 COV took effect, compared to 30% before the rule was implemented.
Says de Ruig: "With record fines for sanctions breaches hitting the headlines and a significant number of institutions carrying out expensive remediation behind the scenes, executives should consider limiting exposure by carrying out a proactive evaluation of the effectiveness of their current tools."