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SEPALink

SEPA compliancy - meeting the SEPA regulation

 

As the deadline, from 31st of October 2016, all credit transfers and direct debits initiated and received in EUR within the European Union must be in ISO 20022 XML message standard SEPA format. The EUR countries have already implemented SEPA rules and now it is time for the non-EUR countries to become SEPA compliant. In practice it means that all banks concerned must be able to receive credit transfer (CT) and direct debit (DD) SEPA orders. Of course, financial institutes will get prepared for sending SEPA orders too. The desired seamless SEPA transition presents both banks and their customers with a specific challenge.

The short period of time available for the preparation as well as the high costs of making modifications to the existing account keeping system make the banks rather prefer to use a middleware to achieve SEPA compliancy.

Omikron Hungary€™s most recent development, SEPALink, is developed to provide banks with a quick and easy to implement solution.

 

The object of SEPALink

 

SEPAlink is a middleware application that makes the existing back office of bank SEPA compliant. Using SEPALink, the banks will be able to initiate and receive SEPA payments from their clearing partners (or directly from a clearing house).

SEPALink is located in the centre of the banking communication system that is responsible for SEPA data exchange. It receives and stores the orders fetched from the account keeping system or received via electronic channels. It also provides a possibility to do a manual or automatic cover status check. The orders that meet all requirements (concerning format, data content, cover status, etc.) are sent to the clearing partner in format required by SEPA interbank communication.

The system also supports incoming transactions completely. It stores and converts the transactions into the format the account keeping system supports, and sends them to it.

 

Architecture

 

In the processes of SEPAlink, a possible AML check point (for example SafeWatch Filtering) can be easily implemented.

  

Main functions

 

Secure, browser based user interface, 3-tier architecture

The browser based user interface is served by a server application that is directly connected to the database of the system.

 

Full support of credit transfers and direct debits

The outgoing transactions can arrive through electronic channels or from the account keeping system.

After being processed, SEPA orders (in €™pain€™ format) received via the electronic channels are stored in the system database, then forwarded to the account keeping system of the bank in a predefined format for cover checking.

Orders coming from the account keeping system are considered already checked for cover.

SEPALink converts the transactions received from the account keeping system and/or electronic channels into interbank SEPA messages (€™pacs€™ format) and delivers them to the clearing partner.

The incoming interbank messages (in €™pacs€™ format) arriving from the clearing partner are converted and forwarded to the account keeping system.


Transactions

 

The solution also provides users with an easy-to-use interface where they can run inquiries on the orders and messages handled by the system.

 

Communication with electronic channels and account keeping system

The solution supports data exchange via both file transfer and a message broker (MQ).

 

Full support of outgoing and incoming SEPA traffic

Not only credit transfers and direct debits but also status reports and so-called R-transactions are supported by SEPALink.

 

Handling ISO 20022 message standards, supporting rulebooks

From time to time new SEPA scheme rulebooks are released. SEPALink is always up-to-date, meeting the requirements of the new rulebooks.

 

Handling R-transactions

In default of account keeping system support, handling R-transactions is not an easy task. Using SEPALink, the R-messages of both transactions and direct debits can be easily entered and handled.

 

Bank calendar

The Single Euro Payment Area requires standardized bank calendar. Since this calendar is usually different from the one used in a member country, in SEPALink it is possible to enter and edit the bank calendar.

 

Handling IBAN and BIC

In contrast to the former practice, it is no longer obligatory to represent BIC code(s) in the orders coming from a customer. Since it is still necessary to use BIC codes in messages between banks, SEPALink converts the IBAN account number found in the order into the appropriate BIC code.

 

SEPA routing table

The SEPA routing table contains the list of direct and indirect SEPA-members. When creating the interbank messages, it must be considered whether the other party is just an indirect participant and to create the fields of the message accordingly.

 

Handling special business events

In SEPALink it is possible to define special business events, at the occurrence of which the system sends an e-mail to the predefined users.

 

Full audit trail

The system logs the special events, all changes made and provides a full audit trail.

 

Access rights handling

The solution has its own access right system but can also be linked to external LDAP based access rights systems.

 

 

Summary

 

SEPALink is located in the centre of the banking communication system that is responsible for SEPA data exchange, ensuring full SEPA compliancy. SEPALink is a middleware solution that can be easily implemented into the processes of the bank and after customization (which typically means the setup of communication with the account keeping system) can be introduced in a short period of time (approx. 2-3 months).