One of the most significant updates in CSCF v2022 is the elevation of Control 2.9 – Transaction Business Controls from an advisory recommendation to a mandatory requirement. This control requires financial institutions to implement robust measures that can detect abnormal payment activity, validate transactions, and reduce the risk of fraudulent inbound and outbound payments without disrupting business operations.
In this blog, we’ll explore what SWIFT CSP Control 2.9 entails, why it has become mandatory, the best practices for implementation, and how financial institutions can achieve compliance while maintaining operational efficiency.
Control 2.9 Transaction Business Controls
SWIFT security controls of the CSCF framework undergo annual updating. It is in retort to the shifting cybersecurity landscape and connected cyber risks. 2.9 Transaction Business Controls were advisory controls in the SWIFT CSCF v2021, whereas now it has flipped to a mandatory one in CSCF v2022. All financial institutions should adhere to the mandatory control as a part of the SWIFT CSP attestation and compliance program.
What SWIFT defines control 2.9 as:
- The control objective is to minimize and eliminate the chance of inbound or outbound fraudulent payments.
- Requires FIs to deploy measures of control that can detect, protect & validate transactions within the leaps of normal business.
- Some areas impacted by the mandatory control include the GUI, communication & messaging interface, and the SWIFT & customer connector.
However, SWIFT doesn’t prescribe the actual implementation of measures as stated above. But it has provided example measures around four key areas for a successful SWIFT CSP attestation and control implementation.
Best practices to be followed by FI for the control implementation
1. Transaction limit outside business hours:
A time limit set for SWIFT message transactions can help minimize deceitful transactions. But, if FIs have intersecting business hours between their units, deploying transaction control limits outside business hours won’t be smooth as planned. Additionally, these fraudsters can also mix SWIFT messages inside corporate hours, and hence they must be keenly monitored.
2. Setting limits on a transaction basis:
Placing limits or restrictions on transaction amounts can be helpful in reducing the impact of the fraud. However, new-gen fraudster tactics use small transaction amounts to evade the particular situation. In that circumstance, FIs need to deploy the rule mindfully.
3. Identification of abnormal activity:
SWIFT furnishes a baseline to check for any abnormal activities or transactions. The main intention behind the baseline standard is to identify and cease those deviated transactional activities. Usage of AI-based fraud solutions combined with the baseline check can prove very effective in the present time.
4. Message validation/verification:
SWIFT also recommends using message validation during mid-day or end of the day to detect and stop financial frauds. However, the mechanism increases manual work and needs proper care before deployment. Message validation requires an accurate and meticulous approach to confirming its benefits.
How FI’s can fulfil SWIFT CSP 2.9 business control requirements?
The CSP 2.9 Transaction Business Control change from advisory to mandatory means that SWIFT CSP attestation requires every FIs to meet its specified requirements. The attestation period for FIs can extend up to the end of the year 2022. But FIs must find a solution that sticks to the stated requirements and, at the same time, minimize any operational impacts. The best option for financial institutions is to partner with expert SWIFT CSP Assessment Providers who can give effective advisory solutions. Some tips to stick in line with the control change are as follows:
1. Limiting traffic outside business hours:
Limiting transactions outside business hours can impact the operational flow of businesses. Therefore, the solution needs to be deployed mindfully without disturbing the existing payment flows. Your third-party partner should have the technological capability to differentiate between outgoing traffic that is source dependent. Use the perfect mix of conventional and machine learning models to determine traffic timing per user/business unit.
2. Limiting traffic that stretches beyond the business boundary:
If an FI transaction goes outside the specified limit, an alert should get generated to examine the transaction before pushing it to the SWIFT network. FIs can use aggregation rules sticking to transactional properties, context, and instructions. Enterprises can try setting a threshold amount and move to the next level using AI and other statistical models. These models help detect any anomaly connected to the made criteria or threshold.
3. Message validation and reconciliation:
A suggestive measure in the CSCF is to utilize MT900 and MT910 confirmation. These messages confirm a debit from the sender’s bank account by executing the received transaction. FIs need to validate if this confirmation matches the underlying payment. Utilizing AI-enabled models can verify the underlying payment against the defined fraud scenarios and help in the automated matching of messages. The standard requires any messages sent to the SWIFT network are present in the back-office application of the financial firm. Enabling a real-time reconciliation model can validate this scenario.
4. Monitoring logging sessions:
Control 2.9 also requires that terminal login session numbers get monitored, ensuring zero gaps in session numbers. Utilizing a warning model to detect these gaps can be healthy. The model should be able to monitor and analyse the logical terminal session numbers to provide accurate findings.
5. Discovering abnormal behaviours:
Discovering abnormalities in the financial payment division is one of the foremost objectives in the SWIFT security controls. These unusual behaviours can be prone to variables such as timing, currency, amounts, correspondence etc. Detecting these is a task at hand considering the complexity of a message. The solution is to leverage statistical and AI models that help discover transaction anomalies.
Final Thoughts
Fraudulent payments are rising high, and it is because of the very that SWIFT CSCF Control 2.9 has pushed from advisory to a mandatory requirement. These controls require a smart deployment without affecting the operational workflow of financial institutions. Partner with ValueMentor an expert SWIFT consulting and assessment provider to meet these fine-grained requirements and confirm your SWIFT CSP attestation.
FAQs
1. What is SWIFT CSP Control 2.9?
SWIFT CSP Control 2.9 (Transaction Business Controls) is a mandatory security control that requires financial institutions to implement measures to detect, validate, and prevent fraudulent inbound and outbound payment transactions.
2. Why did SWIFT make Control 2.9 mandatory?
The control was made mandatory in CSCF v2022 to strengthen fraud prevention as cyberattacks and payment fraud targeting financial institutions continue to increase.
3. What is the objective of SWIFT CSP Control 2.9?
The primary objective is to minimize the risk of fraudulent transactions by implementing business controls that identify abnormal payment activities and validate transactions before processing.
4. Which systems are impacted by SWIFT CSP Control 2.9?
Control 2.9 applies to areas involved in payment processing, including the SWIFT interface, messaging systems, graphical user interface (GUI), communication channels, and customer connectors.
5. What are the recommended practices for implementing Control 2.9?
SWIFT recommends implementing transaction limits outside business hours, transaction amount thresholds, abnormal activity detection, and message validation to strengthen payment security.
6. How can financial institutions detect abnormal payment activities?
Organizations can use baseline transaction monitoring, statistical analysis, and AI-powered fraud detection to identify unusual payment patterns based on factors such as amount, timing, currency, and beneficiary.
7. Why is message validation important in SWIFT CSP Control 2.9?
Message validation helps ensure that payment instructions are legitimate by verifying transaction details and reconciling payment messages with back-office records before processing.
8. How can financial institutions reduce fraud without disrupting business operations?
By implementing intelligent transaction monitoring, risk-based controls, configurable thresholds, and AI-driven analytics, institutions can strengthen security while minimizing operational impact.
9. Who should assist with SWIFT CSP Control 2.9 implementation?
Financial institutions can work with experienced SWIFT CSP assessment and consulting providers to design, implement, validate, and optimize controls that meet SWIFT compliance requirements.
10. How can ValueMentor help organizations comply with SWIFT CSP Control 2.9?
ValueMentor supports financial institutions with SWIFT CSP gap assessments, transaction control reviews, fraud detection strategies, remediation planning, independent assessments, and end-to-end compliance services to help achieve successful SWIFT CSP attestation.
