Internally Developed and Off-The-Shelf Funds Transfer Systems

Action Summary

Financial institutions require efficient systems for transferring funds internally, among themselves, and with their customers for large-dollar payments relating to financial market transactions and settling corporate and consumer payments.

Management and the board should:

  • Establish dual controls and separation of duties for funds transfer systems;
  • Monitor and log access to funds transfer systems, maintaining an audit trail of all sequential transactions; and
  • Incorporate the funds transfer controls into the organization's information security program to ensure the integrity and confidentiality of customer information.

Financial institutions rely on internal funds transfer systems and networks to send payment instructions to their correspondents for the transfer of correspondent balances or to initiate Fedwire Funds Service or CHIPS payments. Large financial institutions have either developed their own funds transfer systems or relied on off-the-shelf funds transfer systems. In either case, the internal financial institution funds transfer systems interface with Fedwire Funds Service and CHIPS, supporting the interface and transaction format specifications for the transmission of payment orders. Off-the-shelf funds transfer systems typically support a variety of treasury, cash management, and straight-through-processing (STP) modules, which automate payment order processing.

The Federal Reserve Banks provide the Computer Interface Protocol Specifications (CIPS) that funds transfer and book-entry securities systems need to adopt in order to implement a CI connection successfully. The Federal Reserve provides a website with a list of vendors who have completed the Federal Reserve Banks' protocol certification process.Refer to http://www.frbservices.org/Wholesale/
ProtocolCertVendors.cfm for a list of protocol certified ven-dors.
The Federal Reserve Banks do not endorse any specific software vendor or product. The Federal Reserve Banks make no warranties or representations with respect to any of the products offered by these vendors except that communication-level software correctly executes systems network architecture (SNA) commands as specified in the CIPS.


 

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