SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TELECOMMUNICATIONS
Why in News?
- Half a dozen public and private sector banks have been slapped with monetary penalties by the Reserve Bank of India for non-compliance of directions in the Swift (Society for Worldwide Interbank Financial Telecommunications) messaging system used by banks worldwide for foreign currency transfers.
- The penalty has been levied for delay in compliance to RBI’s directives on Time-bound implementation & strengthening of SWIFT-related controls.
- It is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes.
- Under SWIFT, each financial organization has a unique code which is used to send and receive payments. SWIFT neither holds funds on its own nor manages external client accounts. SWIFT is headquartered in Belgium.
Why does it Matter?
- Messages sent by SWIFT’s customers are authenticated using its specialised security and identification technology.
- Encryption is added as the messages leave the customer environment and enter the SWIFT Environment.
- Messages remain in the protected SWIFT environment, subject to all its confidentiality and integrity commitments, throughout the transmission process while they are transmitted to the operating centres (OPCs) where they are processed — until they are safely delivered to the receiver.
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