Behind the scenes of global banking, the infrastructure that supports money transfers between countries was changing, both profoundly and discreetly. November 22nd marked the end of an era and the beginning of a new one: the banking communications platform Swift completed its migration to the ISO 20022 standard. With this step, banks and therefore tax authorities now have a much more precise overview of capital movements on a global scale.
To estimate the scope of this update, it is advisable to go back in time. The Society for Global Interbank Financial Telecommunications (Swift) was founded in Brussels in 1973 with the aim of streamlining the international flow of money. The network is currently headquartered in La Hulpe, Belgium, and connects more than 11,000 financial and securities institutions in two hundred countries under the strict supervision of the G10 central banks and the European Central Bank.
This network works as authentic confidential information highway. This allows payment and transfer orders to circulate between financial systems in multiple jurisdictions in a secure and standardized manner. Its strategic relevance is so great The exclusion of an entity from this network was consolidated as a tool of geopolitical pressure. This happened when, following the invasion of Ukraine in 2022, various banks in Russia and Belarus were excluded from the network: international financial isolation was almost complete.
The network connects more than 11,000 financial and securities institutions in two hundred countries under the strict supervision of the G10 central banks and the European Central Bank.
For almost half a century, Swift operated with the MT message format, a limited language that was no longer sufficient due to modern technology and dynamics. The restrictive system only enabled the transmission of texts to a limited extent, made interpretation more difficult and led to numerous operational losses. Significantly, about 10% of transmissions experienced failures or delays due to errors inherent in the old format.
The most recent transformation marked the final standstill of previous technology. From now on it’s the banks required to use MX messages based on the ISO 20022 language. Anyone who does not adhere to this standard will be excluded from global payment transactions. Modernization is imperative to maintain financial integration and international competitiveness.
The new message format is a much more robust tool, capable of transmitting up to ten times more detail about every money movement. Now it is specified in detail who sends the funds, who receives them, the reasons for the operation and all related commercial notices. The density of information represents a true revolution in the traceability of funds.
The MX standard opens up two clearly marked paths. On the one hand, it increases operational efficiency by reducing errors, streamlining processes and facilitating interoperability with new technologies such as blockchain or central bank digital currencies. At this level, speed and clarity are gained and the system is adapted to the challenges of the digital age.
On the other hand, the reform raises the bar for transparency and supervision. Each transfer becomes an easily traceable digital fingerprint available to tax authorities in different countries. You will have access to detailed information like never before, making it easier to detect evasion, money laundering or bank fraud. This level of control opens a new scenario in which authorities can scrutinize the international flow of funds more closely.
Each transfer becomes an easily traceable digital fingerprint available to tax authorities in different countries.
In conclusion, upgrading the Swift network to the ISO 20022 standard advances global financial integration and paves the way for a more efficient and secure flow of money between countries and banks. At the same time, it marks the beginning of a phase in which any transfer will be more clearly visible to those overseeing the international tax and financial systems. The most important technological revolution of the decade is progressing without pause and without hesitation and is renewing the rules of the game in capital transactions worldwide.
The author is Lawyer, specialist lawyer for tax law (UBA). Author of the book “Practical Handbook of Tax Procedures”
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