Bank Secrecy Act Interagency Guidance on Transparency for U.S. Banking Organizations Conducting
FIL-72-2009 December 17, 2009
The federal banking agencies (FBAs) are issuing the attached guidance corresponding to the release of a Basel Committee on Banking Supervision (BCBS) publication addressing transparency in cross-border payment messages.
Following publication of the attached BCBS paper, the FBAs
are issuing guidance on transparency for U.S. banking
organizations conducting cross-border funds transfers.
Cross-border payment messages allow originator and
beneficiary banks that often do not have a direct business
relationship to facilitate the transfer of funds.
Cover payments are used by banks to facilitate funds
transfers between a customer and a beneficiary. The
payments typically involve: (i) a transaction in a currency
other than that of the country in which the originator's bank or
beneficiary's bank is domiciled; and (ii) the originator's bank
and beneficiary's bank do not have a relationship that allows
them to settle directly with each other. In this circumstance,
the originator's bank may instruct the beneficiary's bank to
effect the payment and advise a transmission of funds to
"cover" the interbank obligation created by the payment order
that has been arranged through a separate channel.
Prior messaging standards did not ensure full transparency
of the ultimate originator or beneficiary involved in the
transaction. A new payment message format (MT 202 COV),
effective November 21, 2009, will be used to execute the
transfer of funds conducted through SWIFT with greater
The MT 202 COV format contains mandatory fields with
information relating to the originator and beneficiary of the
transaction and will assist intermediary banks by providing
this information for Office of Foreign Assets Control sanction
screening and suspicious activity monitoring purposes.
U.S. originating and intermediary banks will be required to
use the MT 202 COV message format to facilitate cover
payments and should implement associated procedures
relative to these payments to ensure compliance with
applicable laws and regulations.
FDIC-Supervised Banks (Commercial and Savings)