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How can you manage SWIFT message amendments?

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If you work in financial services, you probably deal with SWIFT messages on a daily basis. SWIFT messages are standardized formats for exchanging financial information between institutions, such as payment orders, confirmations, statements, and requests. But what happens when you need to amend a SWIFT message that has already been sent or received? How can you manage SWIFT message amendments without causing errors, delays, or compliance issues? In this article, we will explain the basics of SWIFT message amendments, the different types and scenarios, and the best practices to follow.

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Amrit Morokar

Senior Manager | Private Markets Advisory at Lionpoint Group

1 What are SWIFT message amendments?

A SWIFT message amendment is a modification or correction of a previously sent or received SWIFT message. For example, you may need to amend a SWIFT message if you discover a mistake in the beneficiary name, account number, amount, currency, or payment instructions. Alternatively, you may need to amend a SWIFT message if you receive a request from the sender, the beneficiary, or an intermediary bank to change some details of the original message.

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Amrit Morokar

Senior Manager | Private Markets Advisory at Lionpoint Group
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SWIFT message amendments play a crucial role in maintaining accuracy and integrity in financial transactions by allowing for the correction of errors or updates to information without having to entirely cancel and reinitiate the transaction. However, it's essential to follow specific guidelines and procedures established by SWIFT to ensure compliance and security in the amendment process.

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2 Why are SWIFT message amendments important?

SWIFT message amendments are important for several reasons. First, they can help you avoid or resolve errors that could affect the execution, settlement, or reconciliation of your transactions. Second, they can help you comply with the regulations and rules of the SWIFT network, the correspondent banks, and the jurisdictions involved in your transactions. Third, they can help you improve your customer service and satisfaction by ensuring that your payments are processed correctly and efficiently.

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Amrit Morokar

Senior Manager | Private Markets Advisory at Lionpoint Group
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SWIFT message amendments are crucial in maintaining accuracy, efficiency, compliance, and effective communication in financial transactions, contributing to smoother and more reliable international financial operations. Risk Mitigation: Swift amendments help mitigate risks associated with financial transactions by enabling quick correction of errors. This reduces the potential for misunderstandings or disputes between parties due to incorrect information in the original message. Cost Savings: Amending a SWIFT message is generally more cost-effective than canceling and reinitiating a transaction. It reduces operational costs and minimizes the impact on financial institutions involved in the transaction.

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3 How do SWIFT message amendments work?

SWIFT message amendments work by sending a new SWIFT message that refers to the original message and specifies the changes to be made. The new SWIFT message must have the same message type as the original message, but with a different message identifier. The new SWIFT message must also include a field 21 (Related Reference) that contains the message identifier of the original message. Additionally, the new SWIFT message must include a field 77E (Narrative) that explains the reason and the details of the amendment.

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Amrit Morokar

Senior Manager | Private Markets Advisory at Lionpoint Group
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First, errors or necessary changes are identified by the sender. Subsequently, a new SWIFT "amendment message" is created, referencing the original message and containing the updated information. This amendment message is then transmitted. Upon receipt, the recipient verifies the changes against the original message, processes the amendments, and confirms them if accurate. SWIFT maintains an audit trail, linking the amendment message to the original, ensuring a complete transaction history. The six steps for processing SWIFT message amendments are below: Identification of Errors or Changes Preparation of Amendment Message Transmission of the Amendment Message Receipt and Processing Confirmation or Rejection Audit Trail and Record Keeping

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4 What are the types and scenarios of SWIFT message amendments?

There are two main types of SWIFT message amendments: sender-driven and receiver-driven. A sender-driven amendment is initiated by the sender of the original SWIFT message, who sends a new SWIFT message to the receiver with the changes. A receiver-driven amendment is initiated by the receiver of the original SWIFT message, who sends a new SWIFT message to the sender with the changes. The type of amendment depends on the scenario and the status of the original SWIFT message. For example, if the original SWIFT message has not been executed or settled yet, the sender can initiate a sender-driven amendment to cancel or modify it. However, if the original SWIFT message has already been executed or settled, the receiver can initiate a receiver-driven amendment to reverse or adjust it.

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Amrit Morokar

Senior Manager | Private Markets Advisory at Lionpoint Group
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SWIFT message amendments encompass various scenarios for correcting errors, updating transaction details, and ensuring compliance in financial transactions. Primarily, these amendments rectify errors such as inaccuracies in beneficiary details, incorrect amounts, or typographical mistakes. Additionally, changes in transaction specifics, like payment dates, currency adjustments, or modifications to transaction terms, Furthermore, inclusion of additional transaction-related data, or addressing compliance requirements through amendments are common scenarios. The flexibility of SWIFT message amendments accommodates scenarios ranging from simple error corrections to comprehensive changes in transaction particulars.

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5 What are the best practices for SWIFT message amendments?

To manage SWIFT message amendments effectively, you should verify the accuracy and completeness of your SWIFT messages before sending them, as well as monitor their status and confirmation to detect any errors or issues that may require amendments. It is essential to communicate with your counterparties and intermediary banks to coordinate and agree on the amendments and their impact on the transactions. Additionally, you should use the appropriate SWIFT message type, format, and fields for the amendments and follow the SWIFT standards and guidelines. Lastly, document and record the amendments and their reasons and details for audit and compliance purposes.

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Amrit Morokar

Senior Manager | Private Markets Advisory at Lionpoint Group
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Best practices for SWIFT message amendments involve meticulous procedures: 1) Clearly identifying errors or changes requiring amendments, 2) Drafting accurate amendment messages referencing the original, 3) Timely transmission through the SWIFT network, 4) Ensuring recipient acknowledgment and verification, 5) Maintaining a comprehensive audit trail, and 6) Adhering to SWIFT standards for transparency, accuracy, and compliance. Effective communication, accuracy in amendments, and adherence to protocols ensure seamless and secure financial transactions.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you manage SWIFT message amendments?

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1 What are SWIFT message amendments?

2 Why are SWIFT message amendments important?

3 How do SWIFT message amendments work?

4 What are the types and scenarios of SWIFT message amendments?

5 What are the best practices for SWIFT message amendments?

6 Here’s what else to consider

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