Delta Capita - Addressing Structured Addresses in ISO 20022

Addressing Structured Addresses in ISO 20022

Executive Summary The financial industry is transitioning to the ISO 20022 standard, impacting cross-border and domestic high-value payment schemes. This migration mandates the use of structured postal addresses to replace the currently used unstructured formats in MT/FIN messages by November 2026. The adoption of structured addresses enhances transaction efficiency, security, and regulatory compliance, aiding in AML, KYC, and sanctions screening. Key aspects of the whitepaper include:

1. Importance of Structured Postal Addresses: Structured addresses

4.

Implementation Timelines: By November 2025, SWIFT will update message sets to include

are essential for accurate identification and processing in financial

hybrid address options, with a one-year grace period allowing all address formats. From

transactions.

November 2026, unstructured addresses will be discontinued, favoring fully structured addresses and allowing hybrid addresses.

2. Hybrid Address – A new concept: Hybrid addresses combine structured elements (Town Name and Country) with limited unstructured

5.

Complexities and Risks: The flexibility of hybrid addresses result in a lack of standardisation

elements (AddressLine), facilitating a transitional phase towards fully

which introduces complexity and risks due to factors like variations in guidelines and

structured addresses.

implementation methods across different market infrastructures, and entities impacting multinational corporations and retail accounts.

3. Industry Drivers: Compliance with FATF Recommendation 16, BIS & G20 Cross Border Program, and Wolf Berg Payment Transparency

6.

Machine Learning Solutions: Machine learning models, such as Nucleus ISO 20022 Data

Standards necessitates the inclusion of structured postal addresses in

Fabric, can facilitate the migration by parsing and standardizing unstructured address data into

payment messages.

hybrid and fully structured formats.

Structured Postal Addresses The payments world is in the process of migrating to ISO 20022 for both Cross-Border (Swift CBPR+) and Domestic HVPS+ schemes, with support for the widely used unstructured address formats in todays MT / FIN messages scheduled to be discontinued from November 2026.

The role of accurately structured addresses is critical for ensuring efficient and secure transactions. In addition to obvious improvements in Transaction Processing, the incorporation of structured address fields in ISO 20022 messages will play an essential role in accurately identifying the parties involved in payments by verifying Debtor (Sender) and Creditor (Recipient) identities, in turn aiding regulatory compliance such as AML, KYC & Sanctions Screening.

Structured Postal Addresses

While the immediate priority lies within cross border and high value / ACH payments, financial institutions globally, regardless of size, must now adhere to either fully structured or hybrid address formats when initiating ACH, high-value payments, and cross-border payments on the SWIFT network.

This mandate is expected to extend to the trade sector in the coming years.

Hybrid Addresses – A New Concept The CBPR+ and HVPS version of ISO 20022 as outlined in the market practice guidelines on structured customer data prohibits mixing of different data elements in one structured element.

However, most corporates and financial institutions have their customer address data elements in an unstructured database format. For example: postal addresses.

This has led to the creation of a new model called “hybrid addresses”.

Unstructured vs. Hybrid vs. Fully Structured Addresses Definitions of the different levels of structure in postal addresses in the context of ISO 2002 and key timelines.

Structured Address

Hybrid Address

To align with HVPS+ and CBPR+, where a fully

A hybrid address must include the Town Name and

structured address is used it must contain a minimum of

Country elements, but it will also allow the (unstructured)

Town Name and Country. A fully structured address

‘AddressLine’ element to be included, subject to a

cannot contain the (unstructured) ‘AddressLine’ element.

maximum of two occurrences, with up to 70 characters permitted within each occurrence.

Unstructured Address

A fully unstructured postal address uses only the Address Line element. Three occurrences of the AddressLine element with up to 35 characters are permitted.

This format will completely be discontinued from 2026.

Industry Drivers FATF Recommendation 16 on Payment Transparency

BIS & the G20 Cross Border Program

Wolf Berg Payment Transparency Standards

Requirements 9 and 10 of CPMIs The FATF, in line with the report emphasize the

In 2023 Wolfsberg updated their

standardized, structured, and

payments transparency

detailed identification of entities

standards, directing all institutions

and individuals.

to embed the usage of ISO 20022

R16/INR.16 revisions, plans to enhance the quality and content of originator and beneficiary information in payment messages. terms with specific focus on postal Requirement 11 focuses on

addresses with a view to

ensuring a common minimum

improving Sanctions Screening,

level of structured postal address

AML and CTF monitoring.

The key proposed change is the mandatory inclusion of addresses for both originators and information. beneficiaries.

Industry Drivers In-country / Currency Specific Regulations

Industry Timelines

Industry Timelines As part of its ISO 20022 release schedule SWIFT will update the current CBPR+ pacs, camt and pain message sets in November 2025 and introduce hybrid (semi-structured) postal address options.

During the one-year grace period, beginning November 2025 a fully unstructured address or fully structured address or hybrid address will be allowed, except for ultimate debtor, ultimate creditor and initiating party where only fully structured address or hybrid address is allowed. The unstructured Address Line element within the hybrid address can be up to 2 lines of 70 characters (2*70).

Industry Timelines Statements (camt.052, camt.053) and debit/credit notifications (camt.054) will also be updated to accommodate all address options but will not restrict usage of the three options at any stage. Other address formats will also be permitted on statements and debit/credit notifications. This change is mandatory for all users of CBPR+ usage guidelines.

Effective November 2026, fully unstructured address will no longer be permitted. These changes will be part of the SR 2026 changes.

Complexities & Risks in Adoption While Hybrid addresses offer a transitional solution for financial institutions worldwide, the long-term objective should be the migration to fully structured addresses. The flexibility of Hybrid addresses, which allows for free-text fields, results in a lack of standardization. This lack of standardization impedes accuracy and eventually undermines many of the benefits provided by ISO 20022, particularly in areas such as automation and data intelligence.

Complexities & Risks in Adoption Multinational Corporates Seek Simplified Solutions: To avoid complexities, multinational Corporate Migration to pain.001 Version 9: Most corporations have

corporates are expecting ERP/TMS providers and account operators to provide a solution.

adopted pain.001 version 03 and have yet to transition to version 9.

Retail accounts: The complexity extends beyond corporates, as the mandate also applies to retail customers.

Variation in Address Options Implementation: Implementation methods for address options will differ

Diverse RTGS / ACH Guidelines: Market infrastructures

across entities.

and Automated Clearing House (ACH) guidelines vary regarding allowed address options.

Implications of Failing to Implement From November 2025, a ‘hybrid’ address will be enabled for all agents and parties where an address can be included, but fully structured addresses will be encouraged by most market infrastructures.

From November 2026, unstructured addresses will be rejected. Hybrid and structured addresses will continue, and fully structured addresses will be encouraged.

Simplifying The Move With Machine Learning

Global address restructuring is

As the complexities of migrating addresses to both Hybrid

a complex task, with multiple

/ Fully Structured variants are significant, financial

common complexities affecting financial institutions.

institutions around the world are now looking at options that will allow them to undertake the migration in one-go to both formats.

Simplifying The Move With Machine Learning Machine learning models and applications such as Nucleus ISO 20022 Data Fabric, trained on millions of data points, across countries, and from different formats can (amongst other things) help meet the requirements to restructure postal addresses to both Hybrid and Fully Structured formats with minimum disruption:

Simplifying The Move With Machine Learning Address Parsing & Standardization Nucleus is pre-trained on vast amounts of address data, following different formats, allowing its Structured Address Parser module to: •

Connect to multiple unstructured address sources within a bank / financial institution.

•

Read and parse free-format addresses.

•

Identify the country that a specific address belongs to, and align the parsers mapping engine accordingly to country-specific address formats, accurately identifying ISO 20022 specific granular address tags.

•

Generate structured output addresses in ISO 20022 specific Hybrid and Fully Structured formats.

Improving Data Quality • Machine Learning can be used to identify inconsistencies and missing information in addresses. By identifying country-specific patterns, ML can suggest corrections and even predict missing elements based on context.

• Nucleus has the ability to execute real-time address lookups for data

In addition to fixing global address problems, Nucleus also helps financial

enrichment, however for the purposes of fixing / meeting global Hybrid and Structured Address requirements, this feature should be

organisations with other structured data mandates and data truncation management risks related to ISO 20022 migrations.

considered as optional.

About Delta Capita Delta Capita, the Financial Services business of Prytek, is a leading Consulting, Managed Services and Technology provider with a unique combination of FS experience and tech innovation capability.

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About Nth Exception • Nth Exception is a boutique payments technology and consulting firm, specializing in ISO 20022. Our payments-anchored capabilities are designed to assist banks in providing their corporate and financial institution customers with greater efficiency, control, and value from payments.

• As specialists in SWIFT messaging, ISO 20022, and alternative payment methods, we work with customer organizations worldwide to help them navigate complex messaging standards and meet the intricate requirements of different schemes and market infrastructures.

• Our expertise enables customers to better manage uncertainty, improve business connectivity and continuity, reduce operational costs, and eliminate barriers to profit in the fast-changing payments landscape.

For more details or to discuss how we can help, contact:

Supriya Dahiwelkar / Michael Levens

Hannah Davis / Akhil Rao

Delta Capita Limited,

Nth Exception Limited,

#40 Bank Street, Canary Wharf,

# 71-75 Shelton Street,

London, E14 5NR

London, WC2H 9JQ

Email: supriya.dahiwelkar@deltacapita.com

Email: hannah@nthexception.com

michael.levens@deltacapita.com

akhil@nthexception.com