October 21, 2022
Japanese Bankers Association

JBA Comments on “Harmonisation of ISO 20022: partnering with industry
for faster, cheaper, and more transparent cross-border payments”

We, the Japanese Bankers Association (JBA), appreciate the opportunity to provide
comments on “Harmonisation of ISO 20022: partnering with industry for faster,cheaper, and more transparent cross-border payments”, dated September 9, 2022.
We hope that our comments will contribute to further discussions.

Comments on “Harmonisation of ISO 20022: partnering with industry for faster, cheaper, and more transparent cross-border payments”
Relevant partsP.6Comments

While adoption of ISO 20022 is proliferating, variability in its implementation and requirements with respect to Strongly agree with the sentence, “variability in its implementation and requirements with respect to crosscross-border payments potentially undermines its benefits. Indeed, many of the inefficiencies that the financial border payments potentially undermines its benefits.”
industry and its end users face with cross-border payments are caused by interoperability issues that arise because To avoid the future variability, the first version up of ISO200022 messages after co-existence period is veryof misaligned message flows and incompatible data models along the end-to-end payment chain. An agreed set of important. As this is the first experience for many MI and market participants, it is desirable to take carefulcore ISO 20022 messages supported by participants in cross-border payments, in combination with a well-defined approach such as taking sufficient timeline and identifying reasonable timeline based on actual experience.
data model, is seen to be a fundamental part of the overall programme to improve the efficiency, cost, speed, andtransparency of cross-border payments.

P.7

The joint task force believes that the CPMI ISO 20022 harmonisation requirements for cross-border payments Whether the CPMI requirements can take effect in 2025 will depend on the content. There are likely to be ashould take effect after the MT/ISO 20022 co-existence period ends in 2025. Implementation during the co-existence number of market participants making the transition for 2025, and the transition period should focus onperiod is not practical as many jurisdictions are in the process of migrating to the standard. Instead, the joint task ensuring a smooth transition. If there are additional requirements, it should be considered to target later
force anticipates defining a data model that will allow those markets that have already adopted ISO 20022, or will than2025.
adopt it in the next release, enough time to comply with the requirements beginning in 2025. In addition, sufficient
time for those at earlier stages of implementation will be provided to align their plans with the desired data modelfor the future.

P.7

Existing ISO 20022 usage guidelines, like work conducted by CBPR+, provide a strong foundation for transitioning It should be noted that the field length limitation require careful discussion from the view point offrom legacy standards to ISO 20022. The existing usage guidelines are very detailed and updated frequently by the harmonization because it would impact on the systems of various market participants and data truncation ofrespective user communities (eg the community of correspondent banks in the case of CBPR+). Thus, they provide transactions.
clear guidelines to users and an established process for responding to the needs of specific user communities as
they arise. During the co-existence period, the existing guidelines will also be flexible in some respects to ease thetransition from legacy formats to ISO 20022. For example, the existing guidelines will allow the continued use of
unstructured data in some cases and will limit the length of certain fields in order to ensure interoperability withlegacy formats.

P.8

Over 50 payment systems responded to a CPMI survey, which has helped inform what should and should not be While it would be useful to define the core messages, it should be clarified how to determine what type ofincluded in the core message set. For example, messages regarding customer direct debits have very limited use in core/non-core messages MIs/market participants should prepare for.
the cross-border space, and are often restricted to a regional or local implementation. Similarly, cheque-related
messages were also excluded from the scope given their declining trend in use.

P.8

The joint task force is currently considering the scope and content of the high-level requirements. The following It should be noted that structured data option and code information lacks flexibility for regulation changes
are under discussion:(e.g. urgent sanctions, additional local reporting requirement, etc.) and rare use cases, as those need predefined elements/codes. For such cases, unstructured information/proprietary should be allowed.

• To achieve the overall objective of end-to-end payment process harmonisation, the joint task force is considering
requiring use of structured data options and code information only. As highlighted by the survey, the greater useof rich and structured data is seen to be a significant factor in reducing frictions that can arise with the processingof cross-border payments. Not only will structured data help facilitate STP, it can also allow for automated andRelevant parts

Comments

potentially real time compliance screening of payments in flight.

P.9

The joint task force is considering requiring use of a common single structured way to identify persons, entities,  It is necessary to consider the maturity or penetration of the identification code in formulating the data

specification since it differs from country to country.

and financial institutions involved in cross-border payments. Defining minimum data requirements and at thesame time restricting options to structured data (eg using ISO identifiers such as the Business Identification Code  It should be considered that BIC is used widely but not all financial institutions have BIC.
(BIC), in combination with recommending use of the Legal Entity Identifier (LEI)), can positively impact the  The usage of LEI is currently out of step in each region. If making it mandatory after 2025, co-operation
processing and screening of cross-border payments along the end-to-end payment chain. This would enhanceof public and private sector will be required, after going-through the process of checking the improving

efficiency by reducing the likelihood of errors due to misinterpretation of data. Clear requirements on providing

STP ratio and cost-effectiveness of implementation including cost of each entities and promotion.

processing costs and charges can further improve overall transparency.

P.9

The joint task force is considering requiring minimum capabilities to enable both the inclusion of structured 

In the consultation scheduled for the end of the year, clarify the ISO data elements to be covered andremittance information with payments and to support mechanisms to reference remittance information when sent

allow sufficient time for consideration. In addition, the encouragement by the financial industry andseparately. The resulting improvement in reconciliation and treasury management processes can provide furtherauthorities is critical to foster the best practice of ISO20022 usage industry-wide through the discussion

benefits to end users.

with related industry groups about the practical use of ISO data elements.
Using Structured Remittance Information will require usage rules of each elements, sender’s correct datasetting and receiver’s capability to use it. It will be important how to define “minimum capabilities” andtimeline of the related parties to enable it.

Does "mechanisms to reference remittance information when sent separately" refer to Related
Remittance Information? Clarification of existing items is fine, but if not, careful consideration isrequired.
clarification.

And sanction screening requirement for “separate information” would also require