Banks have come under increasing pressure to ensure that payments are screened against sanction lists and more than $1 billion worth of fines have been handed out to non-compliant banks over the last 18 months. However as the requirements for snaction screening have increased, many banks have struggled to cope with the resuling workload.

According to Luc Meurant, head of banking, supply chain and corporate markets, Swift,there is an opportunity for Swift to not only work on the standardisation of sanction lists and the filtering process but also to offer an outosuring service for smaller banks.

“Banks currently have three options – to do nothing; to do it all manually or to install software solution in-house. The benefit of the service is that there would be no footprint in their back-office. Banks would simply give us a list of names and a list of transactions,” says Meurant.

Swift introduced a new message standard for cover payments in November 2009, the MT02 COV, designed to bring added transparency to the process. The new standard includes mandatory fields for originator and beneficiary details. Early in 2009 UK bank Lloyds TSB was fined $350m for deliberately removing customer information from payment messages in an effort to escape the sanctions filters of US banks.

However the process is still manually intensive and susceptible to high error rates. A recent survey of 214 payments professional by Dow Jones Risk and Compliance found that the vast majority (78%) of payment industry executives feel the new message standard has helped to reduce banks’ exposure to money laundering and terrorist financing. However, concerns over data quality, false positives and duplicate alerts have signficantly increased. As many as 41% of respondents admitted to being “very” or “extremely” concerned about the number of false positives.

According to Rupert De Ruig, managing director, Dow Jones Risk and Compliance, the issue is not with the messaging standard but with the sheer volume of work and the inconsistent quality of data suipplied by national intelligence agencies. “Banks have more information to enter, more payments to screen and more names to screen against. and because a person’s name is an imperfect identifier this creates a high number of flase positives which have to be dealt with manually.”

De Ruig believes banks are taking the issue of sanctions screening seriously and a number have moved to address the concerns by purchasing additional message filtering technology, although such investment is not evident throughout the industry, particularly among smaller banks.

Swift will be aiming its service at these smaller banks with less than 1000 transactions per day. It is currently in the process of selecting a screening software provider for what will be a Swift-branded service and a formal proposal will be made to the Swift board in December.

Pending board approval, the service will be rolled out in the second quarter of 2011, possibly in two stages – firstly outgoing transactions and then incoming transactions. The project will initially focus on the Emea region followed by Asia and Latin America.

Support for Swift’s invovlement in sanctions screening could be heard during a Sibos conference session on Wedenseday morning on global transaction banking. Karen Peetz, chief executive, financial markets and treasur services, BNY Mellon said: “We are all dealing individually with sanction screening but Swift could help us to achieve some commonality and that is something we are talking to Swift about.”

Source:http://www.finextra.com/News/Fullstory.aspx?newsitemid=21943

The top multinationals banks continue to set up new back office units or expand their existing captive operations in India, even as the model is under criticism for being high cost and less efficient than third-party vendor operations.

Organizations such as Wells Fargo, Ingersoll Rand and Standard Chartered are setting up or expanding their back-office centres in India, reports The Economic Times.

For example, Standard Chartered is setting up a new Knowledge Process Outsourcing (KPO) centre in Bangalore, while Wells Fargo is expanding its captive operations in India for technology services and Business Process Outsourcing (BPO).

According to MarketVista, a Dallas based Everest Research Institute, these three are among the 11 firms that have set up new units or added more staff to their existing units in India during the September quarter, taking the number of captives being set up globally to an 18 month high. Around 28 firms are setting up captive operations in Asia, Europe, and Latin America with India being the most popular destination.

“The numbers of new captives being set up are far more than divestures, indicating a revival in the market,” Ameet Singh, Vice President, Global Delivery, Everest. German firm Kontron, one of the world’s largest manufacturers of embedded computer technology and a supplier to Original Equipment Manufacturers, is also setting up a contact centre in Bangalore to provide sale and tech support to its Asia-Pacific operations.

“Near-term economic pressures that were there earlier have been reduced. But organisations that reviewed their global sourcing agenda could still be looking at the same outcome, a modified strategy or a more intensive one,” said Singh.

The September quarter also saw four captive divestures; UBS’ captive to Cognizant Technology Services, AIG’s to Mphasis, Schneider Logistics to EXL Services and Kyocera Wireless to MindTree.

According to Singh, the market for outsourcing transactions is seeing two counter forces; lower business volumes and opportunity to reduce costs.

“The companies are attempting to push the envelope further in terms of costs leading to offshoring and outsourcing,” said Singh. Based on publicly disclosed transactions, the overall numbers of transactions have fallen to 422 in the September quarter from 467 in the past quarter but contracts from sectors such as financial services have almost doubled from the previous quarter, according to Everest’s research.

Apart from financial services, sectors such as healthcare, travel and energy and utilities are also seeing significant rise in demand for offshoring.

“Although there was a marginal decline of 10 percent in the reported global transaction volumes (BPO volumes decreasing by 14 percent and IT sourcing activity reducing by 8 percent), there were signs of improvement in key geographies and verticals,” said Everest in the study.

Source : http://www.siliconindia.com/shownews/Outsourcing_rises_as_global_banks_expand_captives-nid-62568.html

Top multinationals banks continue to set up new back-office units or expand their existing captive operations in India even as the model is under criticism for being high cost and less efficient than third-party vendor operations. Wells Fargo, Ingersoll Rand and Standard Chartered are some of the banks and companies that are setting up or expanding their back-office centres in India.

Standard Chartered, for example, is setting up a new knowledge process outsourcing centre in Bangalore, while Wells Fargo is expanding its captive operations in India for technology services and BPO. The three are among the 11 firms that have set up new units or added more staff to their existing units in India during the September quarter, taking the number of captives being set up globally to an 18-month high, according to MarketVista, a quarterly analysis of outsourcing trends by Dallas-based Everest Research Institute.

In all, around 28 firms set up captive operations in Asia, Europe, Latin America with India being the most popular destination. “The number of new captives being set up are far more than divestures, indicating a revival in the market,” Ameet Singh, vice-president for global delivery, Everest, told ET. German firm Kontron, which is one of the world’s largest manufacturers of embedded computer technology and a supplier to OEMs, is also setting up a contact centre in Bangalore to provide sale and tech support to its Asia-Pacific operations.

“Near-term economic pressures that were there earlier have been reduced. But organisations that reviewed their global sourcing agenda could still be looking at the same outcome, a modified strategy or a more intensive one,” said Mr Singh. The September quarter also saw four captive divestures — UBS’ captive to Cognizant Technology Services, AIG’s to Mphasis, Schneider Logistics to EXL Services and Kyocera Wireless to Mindtree.

According to Mr Singh, the market for outsourcing transactions is seeing two counter forces — lower business volumes and opportunity to reduce costs.

“Companies are attempting to push the envelope further in terms of costs leading to offshoring and outsourcing,” he said. Based on publicly disclosed transactions, the overall number of transactions have come down to 422 in the September quarter from 467 in the past quarter but contracts from sectors such as financial services have almost doubled from the previous quarter, according to Everest’s research. Apart from financial services, sectors such as healthcare, travel and energy and utilities are also seeing significant rise in demand for offshoring.

“Although there was a marginal decline of 10% in the reported global transaction volumes (BPO volumes decreasing by 14% and IT outsourcing activity reducing by 8%), there were signs of improvement in key geographies and verticals,” Everest said in the study.

Source: http://economictimes.indiatimes.com/infotech/ites/Outsourcing-gets-a-boost-as-global-banks-expand-captives/articleshow/5198086.cms