Policy News

BAFT Response to U.S. Agencies Proposed Basel III Endgame Framework

On January 16, 2024 BAFT made its’ submission to the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC)  in response to the agencies proposed Basel III Endgame Notice of Proposed Rule (NPR).

The association welcomed the opportunity to respond to the request for comment made by the Federal Reserve Board, the FDIC, and the OCC in respect of the Proposed Rule 88-FR-64-028, the “Basel Endgame”.

BAFT is an international financial services industry association whose membership includes U.S. banks which range in asset size from G-SIBs to Regional Banks with less than $200 billion in assets, as well as a broad range of other financial institutions throughout the global community, many of which also operate within the United States. As a worldwide forum for analysis, discussion, and advocacy in international financial services, BAFT member banks provide leadership to build consensus in preserving the safe and efficient conduct of the financial system worldwide.

BAFT closely monitors the impact that new regulatory initiatives could have on the provision of trade financing and payment services that support real economic commerce. To that end, our comments and recommendations are focused on the impact of the Final Basel III Reforms on trade finance.

BAFT supports the intent of the Basel III reforms to reduce variations in reported risk-weighted assets across banks. However, we are concerned that the proposed framework will likely have unintended consequences that negatively affect the availability of credit and liquidity supporting
international commerce conducted by US companies as a result of inappropriate calibrations.

Specifically, trade finance, which consists primarily of short-term, self-liquidating instruments, does not serve as a source of leverage and is vital to the settlement of international commerce involving hundreds of thousands of US companies.

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BAFT Releases New White Paper on Lessons Learned from ISO 20022 Migrations

White paper analyzes several banks’ experiences with ISO 20022 Migrations, identifies lessons learned, and highlights do’s and don’ts for future migrations.

WASHINGTON, DC – BAFT, the leading global financial services association for international transaction banking, today released a new white paper, ISO 20022 Migration: Lessons Learned, which offers a deep dive into the experiences, challenges, and best practices from organizations that have successfully navigated the transition to ISO 20022.

The International Organization for Standardization (ISO) introduced ISO 20022 as a global standard for financial messaging. This migration promises greater efficiency, interoperability, and enhanced data-rich capabilities, but it also comes with its own unique challenges.

The white paper is intended to be a valuable resource for financial institutions, payment service providers, corporations, and technology vendors that are in the process of migrating to ISO 20022 or planning to do so in the near future. It provides actionable guidance and best practices to help organizations ensure a successful transition and maximize the benefits of ISO 20022 adoption.

“Implementing ISO 20022 is a complex endeavor that demands careful planning, execution and continuous improvement,” said Deepa Sinha, Vice President, Payments and Financial Crime, BAFT. “That’s why we chose to feature insights and key takeaways from industry leaders, experts and organizations that have already undergone the migration process in our white paper. We hope this will become an essential tool for those preparing for migration in the year ahead.” 

The white paper covers the essential aspects of migration: 

  • High-level Governance: Solid governance is the key to any successful project, and includes organization planning, communications, operations, technology and external engagement.
  • Data Strategy and Adoption: Understand the importance of data transformation and integration and how organizations have managed data harmonization during the migration. Discover how innovative technology solutions and infrastructure enhancements played a vital role in ensuring smooth transition.
  • Business Phasing Strategy: Explore the strategies employed by successful organizations in approaching the ISO 20022 migration, from project initiation to final execution.
  • Testing and Validation Strategies: Gain insights into the validation strategies and comprehensive testing methodologies that have proven effective in reducing potential disruptions.
  • ISO 20022 Post Implementation and Evolution: Benefit from real-world experiences, successes, and challenges encountered by organizations throughout their ISO 20022 migration journeys.

Click here to read ISO 20022 Migration: Lessons Learned. The white paper is also available within BAFT’s Library of Documents under the Guidance and Industry Practices section.

About BAFT

BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages on a wide range of topics affecting transaction banking, including trade finance, payments, and compliance.

BAFT Media Contact:
Blair Bernstein
Senior Director, Public Relations
[email protected]
+1 (202) 663-5468

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BAFT Releases Updated Correspondent Banking Relationship Guide, Respondent’s Playbook 2.0

BAFT released today an updated version of its Respondent’s Playbook for Obtaining and Maintaining a Correspondent Banking Relationship. 

The BAFT Respondent’s Playbook 2.0: A Correspondent Banking Relationship Guide serves as a roadmap for respondent banks on international anti-money laundering and combating the financing of terrorism (AML/CFT) standards. This updated correspondent banking relationship guide provides actions that may improve the ability of respondent banks to obtain and maintain a correspondent banking relationship.

This is an update to the 2019 guidance document for users of correspondent banking services. The Respondent’s Playbook 2.0 newly outlines the decision-making process of correspondents establishing new and reviewing existing relationships and the measures that respondents may take to increase the likelihood of a favorable outcome.

The 2023 version incorporates current regulatory changes in the marketplace and includes a new section on the ISO 20022 migration in addition to sections covering:

  • An Introduction on the Current State of Correspondent Banking
  • Establishing a New Correspondent Relationship
  • Maintaining an Existing Correspondent Relationship
  • Options for Respondent Banks Unable to Obtain or Maintain a Relationship
  • Special Considerations for Money Services Businesses and Fintechs
  • Frequently Asked Questions from Respondent Banks

BAFT Members can download the Respondent’s Playbook 2.0: A Correspondent Banking Relationship Guide for free. Non-members can purchase the updated guide through the BAFT Store.

Comment on Proposed ISO 20022 Harmonization Requirements for Cross-Border Payments

The Clearing House Payments Company L.L.C. (“TCH”), the American Bankers Association (ABA), and BAFT (Bankers Association for Finance and Trade) (together the “Associations”) submitted a joint comment letter on the proposed ISO 20022 harmonization requirements for enhancing cross-border payments (the “Proposed Harmonization Requirements”) issued by the Committee on Payments and Market Infrastructures (“CPMI”).

The Associations are supportive of the G20 effort to enhance cross-border payments and understand the important benefits that common messaging standards, especially for the ISO 2022 format, could provide for cross-border payments.

At the same time, we believe there are many practical considerations that must be taken into account when developing standards and that without the appropriate balance of flexibility and uniformity, standards can have unintended consequences. We are concerned that overall the Proposed Harmonization Requirements have not struck the right balance and, if finalized and mandated in their current form, would make cross-border payments slower, more expensive, and less accessible than they are today.

Read and/or download the full comment letter below.

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BAFT Submission to the UK Prudential Regulatory Authority on Their Proposed Basel 3.1 Framework

BAFT together with the ICC-UK and several industry associations, has made a joint submission to the UK PRA in response to their proposed Basel 3.1 Framework. Supporting documentation included the ICC Trade Register and the ICC GCD Guarantee Update. In parallel, BAFT made it’s own submission to the UK PRA that is reflective of the global nature of BAFT’s membership.

Updated Legal Opinions for English & New York Law Versions of the BAFT Master Participation Agreement (MPA)

BAFT (Website) has posted updated Legal Opinions (2022) covering BAFT Master Participation Agreements (MPA) issued in accordance with English Law (2008, amended in 2022) & (2018, amended in 2022) and New York Law (2019, amended in 2021). The Legal Opinions covering the MPA (New York Law Version) have been issued by Sullivan & Worcester, UK LLP London, and Sullivan & Worcester, LLP New York. The Legal Opinions for the MPA (English Law Versions) has been issued by Sullivan & Worcester, UK LLP London.

The BAFT MPAs were updated to accommodate LIBOR-related updates, and these newly issued Legal Opinions complete the documentation for utilization.

These documents are available for free to BAFT members and for a fee to non-members through the BAFT website “Members Tools” section.”