Data Cleansing: Getting Your IBANs, BICs and Data in Order for SEPA

The previous gtnews cash management blog I wrote made reference to the issue of data cleansing – the process of detecting and correcting (or removing) corrupt or inaccurate records. This activity is vital in ensuring that a treasury can meet the requirements of the SEPA Credit Transfer (SCT) and SEPA Direct Debit (SDD) formats. A number of gtnews readers have asked me to look at this issue in greater detail in the light of the impending single euro payments area (SEPA) migration end date of 1 February 2014. I have approached this by attempting to define the data cleansing function and then by looking at what you can do to help yourself prepare.

The concern is that if transactional data is not clean then it will not deliver a straight through process (STP) in a corporate treasury’s payment procedure. Any unclean data with inaccuracies will have to be repaired when it reaches a bank, and this naturally incurs an exceptions handling fee. The worry here is that the cost of such repairs may be very high, especially as the volume of such unclean data is likely to rise as SEPA comes into full force. Worryingly, there is also evidence that many corporates have not yet even started looking at the issue of data cleansing, so come 1 February 2014 there are going to be some very large bank fines and disgruntled treasury departments.

The Fundamentals

First and foremost, what do I mean by data cleansing? By data I am referring to international bank account numbers (IBANs) and bank identifier codes (BICs) and also to the mandate management challenge surrounding SDDs. By cleansing I am referring to the process of ensuring that this data is correct within your treasury systems to ensure that when transactions move from you to the recipient, it is in an efficient STP fashion, with no errors. These are the particular requirements for SEPA and having accurate data will save costs – both in terms of efficiency savings and the avoidance of exceptions handling charges from banks. Some research indicates that penalties of EUR50 or more may be imposed on providers of incorrect data. Help is at hand however, and a quick review indicates that there are plenty of vendors and third party companies who can provide dedicated services to review and manage this data.

There are numerous vendors of data cleansing software, with some of the principal ones being: Access Pay, Accuity, Sentenial, CGI Logica, Experian and Clear2Pay. Many others are also of course hoping to get in on the act as the compliance deadline nears. There are important differences between the vendors in terms of the services they offer, but in summary you should consider the following:

  1. You will need to ensure that your master data file has the correct BIC and IBAN information. Companies like AccessPay, Accuity, Experian and others will help clean up existing data in order to validate BIC and IBAN data to ensure it is valid and SEPA-compliant. These solutions can be run as a one-off service and/or pre-submission for on-going payments or collections. Vendors like Sentenial offer a Software-as-a-Service (SaaS) service that will do the initial data clean-up and conversion and then maintenance can be done on a continuing basis.
  2. Regarding direct debits, again your master data needs to reflect the new SDD standards. Mandate conversion tools, such as those supplied by AccessPay and others, can ensure that data is converted from existing legacy mandate data to SEPA-compliant mandates. This is typically a one off, project driven operation.
  3. Finally you need to consider that SEPA regulations for bundled transactions use the ISO 20022 XML message standards, which is mandatory under the SEPA scheme. If your treasury has an enterprise resource planning (ERP) system, for instance, and intend sending SEPA payments in bulk then you will need to choose one of the data cleansing suppliers to transform existing unstructured data into the ISO 20022 XML standards. Keep in mind that not all companies offer all the same services.

These are some of the key factors to consider. The services of data cleansing companies come at a price but it is worth paying to ensure you are conforming to the regulations. The advice is that you should look into this now and not leave it till later, as time is running out. Even if SEPA compliance is not your main driver, ensuring a clean data flow with STP operation, as well as more easily complying with the everyday requirements of sanctions screening, or future-proofing yourself against new rules like the supranational US Foreign Account Tax Compliance Act (FATCA), would be a good idea.

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