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Technological Thoughts by Jerome Kehrli

Dissecting SWIFT Message Types involved in payments

by Jerome Kehrli


Posted on Friday Apr 05, 2019 at 11:40AM in Banking


In my current company, we implement a state-of-the art banking Fraud Detection system using an Artificial Intelligence running on a Big Data Analytics platform. When working on preventing banking fraud, looking at SWIFT messages is extremely interesting. 98% of all cross-border (international) funds transfers are indeed transferred using the SWIFT Network.
The SWIFT network enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. Many different kind of information can be transferred between banking institution using the SWIFT network.

In this article, I intend to dissect the key SWIFT Messages Types involved in funds transfers, present examples of such messages along with use cases and detail the most essential attributes of these payments.


These key messages are as follows:

  • MT 101 - Request for Transfer
  • MT 103 - Single Customer Credit Transfer
  • MT 202 - General Financial Institution Transfer
  • MT 202 COV - General Financial Institution Transfer for Cover payments

This article presents each and every of these messages, discuss their typical use cases and details key SWIFT fields involved.

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Interview about NetGuardians and fighting fraud in the digital era

by Jerome Kehrli


Posted on Monday Feb 04, 2019 at 12:10PM in Banking


The below is an extract from an interview I ran in February 2019 during the EPFL Forward event.

NetGuardians is a Swiss Software Publisher based in Yverdon-les-bains that edits a Big Data Analytics Solution deployed Financial Institution for one key use case: fighting financial crime and preventing banking Fraud.
Banking fraud is meant in the broad sense here: both internally and externally.
Internal fraud is when employees misappropriate funds under management and external fraud is when cyber-criminals compromise ebanking applications, mobile devices used for payment or credit cards.

In the digital age, the means of fraudsters and cyber-criminals have drastically increased.

Cyber-criminals have become industrialized, professionalized and organized. The same technology they use against banks is also what gives us the means to protect banks

At NetGuardians we deploy an Artificial Intelligence that monitors on a large scale, in depth and in real time all activities of users, employees of the bank, but also those of its customers, to detect anomalies.
We prevent bank fraud and fight financial crime by detecting and blocking all suspicious activity in real time.


Jérôme Kehrli, how did you manage to convince a sector that is, in essence, very traditional, to trust you with your digital tools to fight against fraud?
Two different worlds, two languages, two visions?

The situation of the banks is a bit peculiar, the digitization and with it the evolution of the means and the behaviours of the customers in the digital age, was at the same time both a traumatic and a formidable solution.

The digital revolution was a traumatic because the banks, which by their very nature are very conservative, especially in Switzerland with our very strong private banking culture, were not prepared for the need to profoundly transform the customer experience of the banking world: to meet the customer where he is, on his channels, with mobile banking, this culture of all and everything immediately, with instant payments, the opening of the information system, with the explosion of the External Asset Managers model and external service providers with the PSD2 European standard, etc.

The digital revolution has imposed these changes, sometimes brutally, in banks and it is the source of a tremendous increase of the attack surface of banks.

But this same technology that spawned the digital revolution has proved to be the solution too.
Technology has made it possible to build digital banking applications that provide all of the bank's services on a mobile device.
Technology has made it possible to implement innovative solutions that secure the information system and protect client funds.

And in this perspective, Artificial Intelligence is really a sort of panacea: robot advisory, chatbots, personalization of financial advice and especially, especially the fight against financial crime: banking fraud and money laundering

In the end, if five years ago our solutions seemed somewhat avant-garde, not to say futuristic and sometimes aroused a bit of skepticism, today the banks are aware of the digital urgency and it is the bankers themselves who eagerly seek our solutions.

You support the digital shift of the banking sector.
Do banks sometimes have to change their way of operating, their habits, to be able to use your technologies?
(Do you have to prepare them to work with you?)

So of course the digital revolution profoundly transforms not only the business model but also the corporate culture, its tools, and so on.

At NetGuardians we have a very concrete example.

Before the use of Artificial Intelligence, banks protected themselves with rules engines. Hundreds of rules were deployed on the information system to enforce security policies or detect the most obvious violations.
The advantage with rules was that a violation was very easy to understand. A violation of a compliance rule reported in a clear and accurate audit report was easy to understand and so was the response.
The disadvantage, however, was that the rules were a poor protection against financial crime and that's why fraud has exploded over the decade.

Today with artificial intelligence, the level of protection is excellent and without comparison with the era of the rules.
But the disadvantage of artificial intelligence is that accurately understanding a decision of the machine is much more difficult.

At NetGuardians, we develop with our algorithms a Forensic analysis application that allows bankers to understand the operation of the machine by presenting the context of the decision.
This forensic analysis application, which presents the results of our algorithms, is essential and almost as important as our algorithms themselves.

This is a powerful application but requires a grip.

Tom Cruise in Minority Report who handles a data discovery application playing an orchestra conductor, it's easy in Hollywood, but it's not in reality.
In reality, we provide initial training to our users and then regular updates.

In the end, a data analysis and forensic application is not Microsoft Word. Our success is to make such an application accessible to everyone, but not without a little help.
In conclusion i would say that the culture transformation end the evolution of the tools do require some training and special care.

In general, what should a company prepare for, before making a digital shift?

In the digital age, many companies must transform their business model or disappear. Some services become obsolete, some new necessities appear.
We can mention Uber of course but also NetFlix, Booking, eBookers, etc.

For the majority of the industrial base, the digitalization of products and services is an absolute necessity, a question of survival.

Successful process and business model transformation often requires a transformation of the very culture of the company, down toits identity:
Among other things one could mention the following requirements:

  • scaling agility from product development to the whole company level
  • involving digital natives to identify and design digital services
  • realizing the urgency or if necessary create a sense of urgency
  • understanding the scale of the challenge and the necessary transformation. Some say "if it does not hurt, it is not digital transformation"

In summary I would say that a company is "mature" for digitalization if it is inspired by the digitalization of our daily life to adapt its products and services AND if it has the ability to execute its ideas.
Ideas without the ability to execute leads to mess, the ability to execute without the ideas leads to the status quo.

From there I would say that a company must prepare itself on these two dimensions, bring itself the conditions and resources required to identify and to design its digital products and those required to realize them.


Artificial intelligence for banking fraud prevention in the digital era

by Jerome Kehrli


Posted on Wednesday Jul 04, 2018 at 09:34PM in Banking


The digitalization with its changes of means and behaviours and the induced society and industrial evolution is putting increasingly more pressure on banks.
Just as if regulatory pressure and financial crisis weren't enough, banking institutions have realized that they need to transform the way they run their business to attract new customers and retain their existing ones.
I detailed already this very topic in a former article on this blog: The Digitalization - Challenge and opportunities for financial institutions.

In this regards, Artificial Intelligence provides tremendous opportunities and very interesting initiatives start to emerge in the big banking institutions.


In this article I intend to present these three ways along with a few examples and detail what we do at NetGuardians in this regards.

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Artificial Intelligence for Banking Fraud Prevention

by Jerome Kehrli


Posted on Monday Apr 30, 2018 at 02:57PM in Banking


In this article, I intend to present my company's - NetGuardians - approach when it comes to deploying Artificial Intelligence techniques towards better fraud detection and prevention.
This article is inspired from various presentations I gave on the topic in various occasions that synthesize our experience in regards to how these technologies were initially triggering a lot of skepticism and condescension and how it turns our that they are now really mandatory to efficiently prevent fraud in financial institutions, due to the rise of fraud costs, the maturity of cybercriminals and the complexity of attacks.


Here financial fraud is considered at the broad scale, both internal fraud, when employees divert funds from their employer and external fraud in all its forms, from sophisticated network penetration schemes to credit card theft.
I don't have the pretension to present an absolute or global overview. Instead, I would want to present things from the perspective of NetGuardians, from our own experience in regards to the problems encountered by our customers and the how Artificial Intelligence helped us solve these problems.

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Deciphering the Bangladesh bank heist

by Jerome Kehrli


Posted on Wednesday Nov 15, 2017 at 11:03PM in Banking


The Bangladesh bank heist - or SWIFT attack - is one of the biggest bank robberies ever, and the most impressive cyber-crime in history.

This is the story of a group of less than 20 cyber-criminals, composed by high profile hackers, engineers, financial experts and banking experts who gathered together to hack the worldwide financial system, by attacking an account of the central bank of Bangladesh, a lower middle income nation and one of the world's most densely populated countries, and steal around 81 million US dollars, successfully, after attempting to steal almost a billion US dollars.

In early February 2016, authorities of Bangladesh Bank were informed that about 81 million USD was illegally taken out of its account with the Federal Reserve Bank of New York using an inter-bank messaging system known as SWIFT. The money was moved via SWIFT transfer requests, ending up in bank accounts in the Philippines and laundered in the Philippines' casinos during the chinese New-Year holidays.

Fortunately, the major part of the billion US dollars they intended to steal could be saved, but 81 million US dollars were successfully stolen and are gone for good.

The thieves have stolen this money without any gun, without breaking physically in the bank, without any form of physical violence. (There are victims though, there are always victims in such case, but they haven't suffered any form of physical violence)
These 81 million US dollars disappeared and haven't been recovered yet. The thieves are unknown, untroubled and safe.


The Bangladesh bank heist consisted in hacking the Bangladesh central bank information system to issue fraudulent SWIFT orders to withdraw money from the banking institution. SWIFT is a trusted and closed network that bank use to communicate between themselves around the world. SWIFT is owned by the major banking institutions.

In terms of technological and technical mastery, business understanding, financial systems knowledge and timing, this heist was a perfect crime. The execution was brilliant, way beyond any Hollywood scenario. And the bank was actually pretty lucky that that the hackers didn't successfully loot the billion US dollars as they planned, but instead only 81 million.
As such, from a purely engineering perspective, studying this case is very exiting. First, I cannot help but admire the skills of the team of thieves team as well as the shape of the attack, and second, it's my job in my current company to design controls and systems preventing such attack from happening against our customers in the future.

In this article, I intend to present, explain and decipher as many of the aspects of the Bangladesh bank heist and I know.

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