How the SWIFT Network Works

For starters, just to understand the current state of the SWIFT system, we’ll have to familiarise ourselves with a bit of its history. As I explained in the initial post, SWIFT was established as a cooperative in Brussels, Belgium in July 1988 with the help of 13 of its 29 founding banks.

Interestingly, the acronym ‘SWIFT’ stems from the first letter of each founding bank’s name (Sybrand van Zijl’s (CFCN) ‘Secrecy & Communication Network’ and Fabian Druien’s (DAE) ‘Secrecy & Security Network’, to the later ‘Secrecy & Communication Network’ or CSN).

In 1995, after nearly 10 years of success and expansion, the SWIFT Network officially joined the banking network under the CSN umbrella (CIFSDIB) and it has been one of the most important types of payment rails ever since.

Thus, the SWIFT network’s core functions are:

To provide confidential messaging services between financial institutions that allow banks to initiate and receive messages directly from each other in real time.

To facilitate transactions between banks on the basis of the funds held within each institution.

To authenticate the origin of every transaction in the form of a cryptographic key for transactions over the SWIFT Network.

To enable and enforce the authentication of communications and the encryption of messages.

The funding for the project was provided entirely by the participating banks in the CSN system.

Throughout the years, the SWIFT Network has proven itself to be a reliable tool and has scaled significantly as new banks joined the system. Indeed, according to SWIFT’s latest website, it can now reach around 11,000 financial institutions around the world in 220 countries and territories (more than 110,000 employees and 25,000 technology partners).

This means that if we take into account the millions of messages being exchanged between financial institutions every day, the potential for corruption is massive.

Existing Security Threats

Just like in other parts of the world, banking systems are facing intense levels of cyber-attacks. These attacks come not only from independent hackers but also from criminal organizations and even governments.

Hackers employ various strategies to compromise banking systems. They might directly breach computers to steal sensitive information, which can then be sold on the black market. Moreover, account takeover fraud is a prevalent threat. In such cases, cybercriminals gain control over banks, sending fraudulent instructions through the SWIFT network to transfer funds. For a deeper understanding of what is account takeover fraud and its potential consequences, consider reading informative blogs on the subject

Consider another scenario of criminal organizations employing hacking tools and techniques to breach the security measures of financial institutions, such as banks. These organizations may exploit vulnerabilities within systems like SWIFT or other banking platforms to gain access to sensitive banking data, which they can then share with other criminals through collaborative efforts. These individuals may not necessarily belong to the same organization but are willing to cooperate and exchange information. To counteract such threats, many cybersecurity experts actively collaborate with banks and contribute to raising awareness through various means, including tech security podcast, conferences, and seminars. The combined efforts of financial institutions and security specialists have played a pivotal role in minimizing the risks associated with hacking financial networks, safeguarding these systems to a considerable extent.

It is worth noting that banks have different solutions to the threat, which is not unlike that of what a mobile casino might come under. There are always such security concerns and threats when dealing with money, but that’s why payment platforms and the likes of casino sites are classified as falling under the financial services sector, as they provide a value-added service which encompasses security of customers’ money.

A noteworthy development is the adoption of machine learning and artificial intelligence by banks to fortify their security measures. These technologies play a crucial role in identifying unusual activities and adding an additional layer of protection. They excel in monitoring user access, swiftly detecting any suspicious behavior, and promptly flagging potential malicious attempts to breach the system. For banks, this integration of advanced technologies is invaluable, as it equips them with powerful tools to safeguard both their customers and their internal networks. This forward-thinking approach is pivotal in ensuring a secure and trustworthy banking environment.