The SWIFT organization is responsible for assigning the SWIFT codes for banks all over the world. Along with the codes that are assigned to each bank, the SWIFT organization also makes available a network that these banks can use to exchange messages securely, enabling them to carry out transactions on behalf of their customers. They have standardized this entire message structure, which has resulted in an enormous amount of errors that might have happened otherwise in every day financial transactions.
The SWIFT organization is responsible for the following five standards.
- ISO 9362
- ISO 10383
- ISO 13616
- ISO 15022
- ISO 20022
Each of these standards have been standardized by the ISO organization, as made clear with the ISO prefix on each of these standards. Once a standard has been vetted by the ISO office, that standard is what all institutions that come under the umbrella of the standard must follow.
Each of these standards performs one specific function. The idea behind this is that, as long as an institute follows all the specifics as mentioned in that standard, they would have no trouble communicating with other members who are following the same standard. An easy way of understanding this is to think of car stereo systems. No matter which brand of car you are using, as long as the stereo system manufacturer has designed his system keeping in mind standards that govern car manufacturer, he is sure that the stereo would work with your car. Standards do the same thing.
The first standard in the above list, the 9362, has to do with allowing for a system that helps member banks communicate with each other. It lays out all the technicalities, formalities, rules and regulations that need to be followed to ensure that messages are sent and received the way they are supposed to be received. The second standard, the 10383, deals with the system that is responsible for assignment and management of codes for exchanges. This standard also has to do with market identification marks for the financial instruments as well as securities that will be dealt with by the financial institution.
The 13616 standard is about the registry of IBAN that is maintained by the SWIFT organization. It deals with all the complexities that go into assigning and maintaining the enormous database of account numbers. The last two standards are the 15022 and 20022, with the first one establishing a messaging scheme and the second one connected to universal financial services.