The adoption of the ISO20022 (www.iso20022.org) in the non-EU banking world is taking pace. The Bank of England issued a policy statement regarding the integration of ISO20022 message elements to enhance data quality and quantity in its CHAPS payment system. 

As background information and motivation the bank states: “In May 2017, the Bank announced its vision for a renewed Real Time Gross Settlement (RTGS) service to enhance resilience and promote innovation. As part of this vision, the Bank confirmed it was basing the renewed RTGS service, including CHAPS payments, on the global ISO 20022 messaging standard. Using the ISO 20022 messaging standard will help underpin the Programme’s objectives of higher resilience, broader access, wider interoperability, better user functionality and improved end-to-end risk management in the renewed RTGS system, alongside improved harmonisation with global payment systems.”

Migrated elements

Among others, the following ISO20022 elements will be migrated to CHAPS:

• Purpose Code
• LEI (Legal Entity Identifier)
• Remittance Data
• Structured Addresses
• Extended Character Sets

Implementation roadmap

The enforce the usage of the implementation the following roadmap is planned for CHAPS DPs (direct participants):

• Feb. 2023 – Spring 2024: monitoring of each CHAPS DPs usage of enhanced data without taking formal action
• Spring 2024 – 2026: when sending enhanced data is mandatory, proportional enforcement action will be taken where firms are not providing satisfactory data
• From 2026 onwards: depending on the impact on financial stability, payments may be rejected depending on several factors such as the adoption of the ISO20022 standard of all correspondent banks and the current non-compliance rate

The below picture is taken from the statement and shows the enforcement roadmap graphically.

Read the full official Bank of England statement in the attachment of this article.

Glossary

CHAPS

These are payments to UK accounts that are guaranteed to arrive on the day you make them, as long as you set up the payment in branch, by phone (Business customers only) before 3.30pm or online before 5pm. *

LEI (Legal Entity Identifier)

The Legal Entity Identifier (LEI) is a 20-character, alpha-numeric, code based on a global standard to uniquely identify any legally distinct entity that is party to a financial transaction. **

Purpose Code

These are four letter codes which are carried across the payment chain, providing information to all users in the payments chain to indicate the reason a payment is being made. **

References

* https://www.barclays.co.uk/help/payments/payment-information/bacs-chaps-faster-payments/ on July 8th, 2021

** https://www.bankofengland.co.uk/-/media/boe/files/payments/rtgs-renewal-programme/iso-20022/policy-statement-implementing-iso-20022-nhanced-data-in-chaps-december-2020.pdf on July 8th, 2021