Swift Infrastructure 2j1b

SWIFT:

The Financial Industry Infrastructure for Secure Messaging Gabriel Soriano October 4th , 2006 NYSSA Banking Convention Corp_present_20060927_v27.ppt

Slide 1

Agenda 1 Overview of SWIFT 2 Access to the SWIFT interface 3 Access to the SWIFT network 4 Message integrity, confidentiality controls 5 Messaging Service and Interface Control functions

Corp_present_20060927_v27.ppt

Slide 2

Introducing SWIFT

y Sta t i n nd u ar d m m s Co

Platform


Slide 3

The SWIFT community banks found SWIFT 1973

4

8 198

1990

2000

1996

19 98

- payments MIs - proxy voting agencies - non-shareholding financial institutions Corp_present_20060927_v27.ppt

19 92

1999

95 19

- treasury counterparties - treasury ETC service providers

travellers cheque issuers

9 198

2001

MA-CUGs securities MIs

20 02

0 20

fund s

19 87

securities market data providers

- broker/dealers - central depositories & clearing institutions - exchanges

money brokers - registrars & transfer agents - custody providers - trust or fiduciary services companies investment managers

trading institutions

treasury securities ETC service providers Slide 4

SWIFT governance Oversight

National Bank of Belgium and G-10 Central Banks

Governance Board Board Committees National Member Groups Groups SWIFT SWIFT community Corp_present_20060927_v27.ppt

Slide 5

Sibos – forum for industry dialogue  Financial

industry’s premier event  Global forum to debate strategic issues  Conference, exhibition, networking  6,000 executives and technology managers  2007: Boston, US, 1-5 October


Slide 6

Working with SWIFT Partners  Solution Partners: Providers of business

applications, middleware, and interfaces

 Service Partners: Implementation and integration

of connectivity and SWIFTSolutions

 Business Partners: Partners Marketing and selling SWIFT

products

 Network Partners: AT&T, Colt, Equant, BT Infonet


Slide 7

SWIFT figures (July 2006) 2.5 billion messages per year 7,940 customers 206 countries Average daily traffic 11.2 million messages Peak day of 12.8 million messages 30 June 2006


Slide 8

SWIFTNet FIN messages by market (July 2006) Treasury

Trade

104 million mgs 27 million mgs

6 %2 %

Securities

Payments

895 million mgs

605 million mgs

37%


55%

Slide 9

Traffic and Pricing Harnessing economies of scale Price (EURcent/msg)

50 45

Traffic (Millions of messages)

3000 ffic

a Tr

40 35

2000

30

1500

25 20 15

2500

1000 Price

10

0

19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 0 20 5 06 E

5

500


Slide 10

Extending reach Embracing the business community

Corporates Securities Banking and Payments


Slide 11

Banking Market Infrastructures – July 2006 Live Albania (AIP) Algeria (RTGS) Angola (PTR) Australia (PDS) Austria (ARTIS) Azerbaijan (AZIPS) Bahamas (BHS) Barbados (BDS) Belgium (ELLIPS) Bosnia & Herzegovina (BIH) Bulgaria (BGN-RINGS) Canada (LVTS) Chile (Netting - LBTR) CLS Bank Croatia (HSVP)

Denmark (DDK-KRONOS) Egypt (CBE) EBA Clearing (EURO1/STEP1) ECB (TARGET) Finland (BOF) (CRI – PNS/TBF) (RTGSPlus) Ghana (GISS) Greece (HERMES) Guatemala (RTGS) Hungary (VIBER) Ireland (IRIS) Italy (BIREL) Jordan (RTGS) Kenya (KEPSS)

Kuwait (RTGS) Latvia (LVL) Luxemburg (LIPS) Malta (MARIS) Mauritius (MACSS) Namibia (NISS) Netherlands (TOP) New Zealand (AVP) Norway (NICS) Oman (RTGS) Philippines (PPS) Romania (REGIS) Slovenia (SIPS) South Africa (BOP RTGS - SAMOS)

Implementation Bahrain (RTGS) Botswana (RTGS) Central African States (BEAC) Eurosystem (TARGET2) Israel (RTGS)


Spain (NSLBE - SLBE) Sri Lanka (LankaSettle) Sweden (RIX) Switzerland (Remote Gate) Tanzania (TISS) Thailand (BAHTNET/2) Trinidad & Tobago (SAFE-TT) Uganda (UNIS) United Kingdom (CHAPS-£ CHAPS-€ / Enquiry Link) United States (CHIPS) Venezuela (PIBC) Zambia (RTGS) Zimbabwe (ZETTS) West African States (BCEAO)

Planning/Discussion

Lesotho (RTGS) Morocco (RTGS) Pakistan (RTGS) Singapore (MEPS+) Tunisia (RTGS)

High-Value Payments

Fiji (RTGS) Georgia (RTGS) Lebanon (RTGS) Palestine (RTGS) Peru (RTGS) Russian Federation (RTGS)

Slide 12

Community and Business dimensions Heritage

• Established in 1973 by 239 banks in 15 countries • Developed shared messaging platform for financial transactions • Emphasis on security, reliability and availability

Understanding

• Serving over 7,800 financial institutions across 204 countries • Payments, Securities, Foreign Exchange, Treasury and Trade • Reducing costs, improving automation, managing risk

Neutrality

• Industry-owned community • Overseen by regulatory authorities • Impartial to the data transacted across the messaging platform

Technology

• Store and forward, file transfer, interactive query & response • Open standards • IP VPN over fibre-optic backbone


Slide 13

SWIFT  Business

and Technical Messaging Communications across the lifecycle of a financial transaction

 SWIFT

does NOT provide clearing or settlement services

 SWIFT

does not hold s or assets

 Participants  SWIFT

are responsible for their data

is neutral, apolitical and -owned


Slide 14

Introducing SWIFT


Platform


Slide 15

Message categories 0 System messages 1 Customer transfers & cheques 2 Financial institutions transfer 3 Foreign exchange, money markets & derivatives 4 Collections & cash letters 5 Securities markets 6 Precious metals & syndications 7 Documentary credits & guarantees 8 Travellers cheques 9 Cash management & customer status


Slide 16

Message structure


Slide 17

SWIFTStandards development A business centric approach Business process modelling

Standards

SWIFTNet

SWIFT Corp_present_20060927_v27.ppt

Market practice

Applications Integration

Partners Slide 18

SWIFTStandards Payments market

Single Credit Transfers Exceptions & Investigations Cash Management

Cash Management

MT 9xx

MT 101

MT 9xx

Ordering customer


MT 9xx

MT 1xx, 2xx

Exceptions & Investigations

Beneficiary customer’s financial institution

Bulk Payments (CT + DD)

Exceptions & Investigations

Cash Management

Payment Initiation (CT + DD)

Ordering customer’s financial institution

Beneficiary customer FIN-based

XML-based (under construction)

Slide 19

Introducing SWIFT


Platform


Slide 20

Single access infrastructure Applications Trade

■Payments ■Foreign Exchange ■ Securities ■ Reporting

Messaging Services ■ FIN ■ FileAct ■ InterAct ■ Browse

ABC Bank

Treasury SWIFTNet

XYZ Bank

SWIFTNet interface Payments Investigation



One platform



Lower costs



Full STP



Reduced risk



Highest level of security and resiliency



Improved liquidity management



Facilitate Compliance

 Corp_present_20060927_v27.ppt

Standards

Other Bank

Any Bank Slide 21

SWIFT product stack Payments  Treasury  Trade  Securities Standards

Rules

Messaging Services Directories and Information Services

Interfaces

Security

Resilience

Quality of service

SWIFTSolutions

SWIFTSolutions

Secure IP Network (SIPN) Corp_present_20060927_v27.ppt

Reliability

Slide 22

Identify potential risks in the following areas :

 Access

to the SWIFT interface

 Access

to the SWIFT network

 Integrity/confidentiality  Integrity

of the SWIFT messages

of the message flow


Slide 23

SWIFT interfaces – Open and close connection to

STN/SIPN – Send messages to SWIFT – Receive messages from SWIFT – Manually enter messages – Accept messages from a back

office application – Send messages to a back office

application – Send messages to a printer


Slide 24

SWIFT interfaces

– SWIFTAlliance Access – SWIFTAlliance Entry – MERVA/ESA – TURBO SWIFT – STELINK – MINT – FASTWIRE – BESS – NOVA SWIFT – ...


Slide 25

Connecting to SWIFTNet Many ways of implementing… Messaging Layer

Business Layer

Back Office application

SWIFTNet Services

Middleware

Messaging interfaces



Communication Layer

Communication Interfaces

VPN box

SWIFTNet

Middleware



…….


Your counterparty

Slide 26

SWIFTAlliance interface Application Layer

Middleware Layer

Messaging Layer

SWIFTAlliance Access (SAA) SWIFTAlliance Entry (SAE)

You


Communication Layer

SWIFTNet Services

SWIFTAlliance Gateway (SAG) SWIFTAlliance Starter Set (SAS)

VPN box

SWIFTNet

Your counterparty

Slide 27

g on to the SWIFT interface


Slide 28

s  Initialisation  Master

✓

s documents available ?

✓

Access to s documents ?


Slide 29

s of the SWIFT interface  Anonymous

names vs Personal operator names  Are

all operators still using the interface?


Slide 30

Enabling an operator  Automatic

enabled when approved by both LSO and RSO


Slide 31

Disabling an operator  Automatic

after too many wrong s

 Manually

by LSO, RSO or anybody with disabling permission


Slide 32

Security parameters  List

of configuration parameters

– e.g. period, max # of bad s…  only

visible by LSO and RSO


Slide 33

SWIFTAlliance: Segregation of duties

Creation

Verification

Authorisation

Approval Modification


Slide 34

Profiles  Each

operator has minimum one profile

a

profile defines the applications, functions and permissions for one or more operators

 one

profile can be given to several operators

 if

permissions change, then the operators are disabled. LSO and RSO must re-approve these operators


Slide 35

Profile details A

profile has 3 levels

– applications – functions – permissions


Slide 36

Permission details  Prohibited

nothing = no restrictions

 Allowed

are all MTs starting with 1, 2 and 9

 SWIFT

FIN system MTs not allowed


Slide 37

What to check in a profile?  Access

control

 Message

Creation and Modification

 Message

Approval

 Message

File

 Security

Definition


Slide 38


 Access


 Access




of the message flow


Slide 39

SWIFT’s Secure IP Network (SIPN) Customer

Swift

Network Partner

Network Partner 1

VPN box Customer

Swift

VPN box

POP

M-E

IPsec tunnels provide end-to-end protection through the ‘untrusted’ vendor IP networks

Network Partner 2

SIPN Backbone Network OPCs

SIPN Access Network

Backbone Access Points

SIPN Corp_present_20060927_v27.ppt

Slide 40

Security equipment needed to connect to FIN  Card

readers

 Integrated

Circuit Cards (ICCs)

Bank A

Corp_present_20060927 _v27 .ppt

Bank B

Slide 4 4

Secure Card Reader (SCR)  Functions

related to BKE and SLS services

 Configuring

and managing ICCs

 PIN

updates

 SCR

configuration


Slide 42

Integrated Circuit Card (ICC)  contains

functional elements of microcomputer

 embedded  works

chip within the card

only when inserted into card reader

 protected  unique

by 1 or 2 PINs

reference = SWIFT Card Number (SCN)


Slide 43

Connecting to the SWIFT network Secure and Select (SLS)

FIN

APC SELECT LTC


Slide 44

Manual and Select  Insert

ICC in the card reader

 use

the CBT to send and Select to SWIFT


Slide 45

Automated and Select  No

operator intervention



ICC must be in card reader on and Select

 or

Session Keys must have been ed in advance


Slide 46

Disconnecting from the SWIFT network

FIN

APC

QUIT

LTC


Slide 47

SWIFTNet FIN Phase 2 PKI: FIN Access control PKI: End-2-end security RMA: Relationship mgt.

SWIFTNet PKI

PKI HSM

SWIFTNet FIN interface


PKI

FIN PKI

PKI

HSM

SWIFTNet FIN interface

Slide 48


 Access


 Access




of the message flow


Slide 49

Authentication  applied

on -to- messages

 assures

identity of sender

 integrity

of message text

 mandatory


for most message types

Slide 50

Authenticator keys : what to check?  Keys  Still

regularly changed ?

correspondent relationship ?

 Keys

securely stored ?

 Procedure

for unsuccessful BKE ?

 Procedure

for messages that failed authentication?


Slide 51

Local Authentication  authentication

between back-office application and SWIFT interface


Slide 52

Integrity of the message flow : session numbers

FIN

1281 APC

Select

1265 LTC


Slide 53

Sequence numbers 472136 Input Sequence Number

327185 Output Sequence Number


Slide 54

Message Input Reference (MIR)

031020ABNKBEBBAXXX0142123456 input date


sender’s address

input input session sequence number number

Slide 55

Message Output Reference (MOR)

031020ABNKBEBBAXXX0142654321 output date


output output receiver’s address session sequence number number

Slide 56

Routing in the SWIFT interface

printer 1

printer 2

application


Slide 57

Routing in the SWIFT interface  Are

all messages ed for ?

 Are

all the messages routed to the right place ?

 Is

there any specific routing for received messages with PDE or PDM trailer ?


Slide 58

Interface/Network Audit Trails


Slide 59

Message File  keeps

copy of all messages

 status

and history of messages can be checked


Slide 60

Identification of a message : UUMID  (Unique)

Message Identifier

IBNPAFRPPXXX202TR7823689

input/output message

MT

sender’s reference

correspondent


Slide 61

Event Journal  events

in the SWIFT interface  actions initiated by the software or actions by s


Slide 62

Search function in Event Journal  Search

on

– date and time – class and severity – operator – description of the event


Slide 63

MT 081 Daily Check Report  lists

number of messages sent and received for all APC or FIN sessions closed since previous MT 081 daily at approximately midnight local time, provided APC and FIN are closed

FIN 081

APC 081

 generated


LTC

Slide 64

MT 082 Undelivered Message Report  received

from SWIFT every day

 lists

all undelivered messages at generation time : messages sent by your institution but not yet received by your correspondent

082


Slide 65

tion

Example of an auditor’s profile Applications

Functions

Permissions

Access Control

Signon

Applic. Interface

Open/Print Partner First part Local Aut Key = Yes

BK Management

Open/Print Communicating Pair (pre-agree/keys) Access : Prohibited nothing

Event Journal

-

Message File

Search

Start and End time

Completely hide messages of other units=No


Slide 66

Making financial messaging safer and less costly


Slide 67

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