Abnormal Activity Detection in SWIFT Financial Transactions by Machine Learning and Behavioral Analysis
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a network that enables financial institutions to transmit financial transaction information in a secure, standardized and trusted environment. However, due to known loopholes in the system, banks and other financial institutions have been documenting fraud with SWIFT. In one case, system controls over the creation, validation, approval, and transmission of SWIFT free-format messages were not implemented, allowing bankers to divert funds.
This article explains how the SWIFT network works, reviews documented fraud use cases, and shows what financial institutions can do to prevent SWIFT fraud.
Why SWIFT Is Mainstream
SWIFT was originally established solely to support treasury and correspondent trading. Remittance-based messages still account for nearly 50% of traffic, but 43% are related to securities trading. The rest of the traffic is related to treasury trading. More than 15 million financial messages per day (5 billion per year) are exchanged on SWIFTNet, connecting over 11,000 global financial institutions in over 200 countries and regions.
SWIFT users
SWIFT's robust message format was so scalable that it was gradually expanded to serve the following verticals:
- Banks, brokerage firms, trading companies
- securities dealer
- Asset management company
- Clearing Houses, Depository Institutions, Exchanges
- business corporation
- Fixed income market participants and service providers
- Forex Broker, Financial Broker
SWIFT does not store funds or manage accounts on behalf of its customers, but enables secure communication for its user community around the world. By exchanging standardized financial messages in a reliable manner, it facilitates the flow of funds both domestically and internationally and underpins international commerce.
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