Author: Mark DoughtyHead of Product Design
With the November ISO20022 deadline fast approaching, the payments industry is gearing up for a major transition. The end of the coexistence period will mark the point when Swift will stop processing MT payment messages (cat 1, cat 2), leaving only MX payment messages in play. But the big question remains—are we ready?
While the U.S. Federal Reserve’s recent decision to reschedule its migration to July 2025 has added a new twist, the industry continues to monitor the global adoption of ISO20022. As we approach this critical milestone, it’s important to explore what this migration means for the future of sanctions screening.
A long time coming
The shift from MT to MX messages has been in motion for years. March 2023 saw the first major step when financial institutions (FIs) were mandated to receive MX payment messages. In November 2025, they will also be required to send MX messages—a move that will reshape payment processing globally.
This transition to a more structured and granular messaging format offers several key benefits, from improving automation and reducing friction to enhancing compliance and security. But what does this mean for sanctions screening?
ISO 20022 & sanctions screening: Unlocking new potential
At GSS, we strongly believe that ISO20022 presents a significant opportunity to enhance sanctions screening while reducing the number of false positives, a persistent challenge for the industry.
The increased granularity and structure in MX messages allows for more precise targeting of data points during screening. This aligns with Swift’s guiding principles for screening, which advocate for a targeted approach—something GSS has been actively developing in collaboration with the industry through the ‘GSS Targeted Screening Standard’.
Another key advantage of ISO20022 is its common object structure, which enables a more holistic comparison of entities against sanctions lists. By leveraging all available information about an entity in a message, FIs can improve accuracy and reduce false positives.
Looking beyond traditional screening methods, the richness of ISO20022 data also supports entity resolution techniques. This means FIs can build a more complete view of an entity, improving both screening accuracy and adjudication processes—an area GSS is actively exploring to drive innovation in sanctions detection.
Standardisation vs. data quality: The key challenge
While the migration to ISO20022 promotes greater standardisation, challenges remain. Regional variances in implementation and data quality issues could hinder the full potential of the new format.
One example of an interim solution is the ‘hybrid address’, designed to accommodate legacy IT systems that do not yet support the required granularity. However, storing critical information in free-text fields poses risks—potentially diluting the benefits of structured data.
Ultimately, data quality will be the key factor in unlocking the true power of ISO20022 for sanctions screening. Could data integrity become the next major industry focus?
What comes next?
With some financial institutions already live with ISO20022, a crucial question remains: Are they seeing tangible benefits?
Will the shift lead to more Requests for Information (RFIs) in the short term, or will sanctions screening become more efficient as the industry fully adapts to MX messaging?
As we approach the next phase of this migration, GSS will be discussing these critical topics at our upcoming Sanctions Leaders Roundtable on Friday, 14 March. Stay tuned for key insights from industry experts on how ISO20022 is reshaping the future of payments and compliance.
