Transparency in payments messages

October 2007

The Basel Committee welcomes the dialogue between the public and private sector over the issue of enhanced transparency for cover payments initiated by the industry through the Wolfsberg Group and the Clearing House Association as well as the proposals under discussion in the SWIFT community to increase the transparency of transfers. A solution improving transparency in international payments should aid anti-crime efforts worldwide.

Cover payments are used in correspondent banking in particular to execute transfers ordered by customers in foreign currencies. This technique of cover payments has advantages for banks, but the current messaging standards do not ensure full transparency for the intermediary banks on the transfers they are helping to execute. This has in some cases raised concerns about the risk that such a type of message could be chosen on purpose to conceal the names of parties to a transaction and about the ability of the intermediary banks to comply with their obligations.

The Committee encourages the industry, which is best placed to design the technical solutions to meet this challenge, to proceed with all the necessary changes in order to implement as soon as feasible these solutions for all relevant standards of messages.

The Committee encourages the effective and genuine use of such solutions.

The Committee has asked its AML/CFT Expert Group to review the supervisory issues related to cover payments and the industry's initiative, in coordination with all interested stakeholders and in particular the FATF, overseers of payment systems and the industry, in order to reach a consensus on principles informing supervisory policies and priorities for the implementation of the transparency rules.