Cross-border settlement system between banks

Abstract

An inter-bank cross-border settlement system is compatible with an SWIFT message format, strengthens a KYC / AML information sharing mechanism, adopts an encryption technology, and distinguishes access permissions of different associated parties. Information among banks is transmitted as a part of specific stable currency, so that the system is safer, more transparent and more traceable.

Description

TECHNICAL FIELD

[0001] The present invention relates to a cross-border clearing and settlement system between banks. BACKGROUND

[0002] The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been the backbone of global cross-border transactions since 1973. It operates as a messaging network, enabling financial institutions to securely transmit payment instructions. However, SWIFT does not directly handle fund transfers; instead, it relies on a network of correspondent banks to settle transactions. This process introduces multiple intermediaries, resulting in delays (typically 1-5 days), higher costs (due to fees for each intermediary and foreign exchange), and opacity in transaction tracking. While SWIFT's standardized messages (MT / MX format) ensure interoperability, its centralized architecture and traditional infrastructure are inefficient in the face of today's demand for real-time, low-cost transactions.

[0003] Blockchain technology, a decentralized ledger system, offers transformative potential for clearing and settlement by addressing SWIFT's limitations. SUMMARY

[0004] Based on the aforementioned drawbacks of the prior art, the present invention provides a cross-border clearing and settlement system between banks to address these issues.

[0005] The present invention provides: A cross-border clearing and settlement system between banks, characterized by comprising: A specific clearing and settlement service system, including a blockchain interaction device, an encryption and decryption module, and a message processing module; A specific stable coin for transmitting the value of legal tender and risk control information; A specific blockchain ledger deployed on the blockchain for providing immutable records for all transactions; A switching module for implementing routing between the blockchain network or a third-party clearing and settlement system; When initiating cross-border clearing and settlement between banks, the initiating bank sends a request to the switching module, and the bank switching module selects network routing; If a third-party clearing and settlement system is selected, the switching module routes to the third-party clearing and settlement system and completes the transaction with the receiving bank; If a blockchain route is selected, the blockchain transaction process is as follows: transaction information is sent to the specific clearing and settlement service system, the original transaction information is encrypted by the encryption and decryption module to generate a specific stable coin, the blockchain broadcast is executed by the blockchain interaction to be deployed to the specific blockchain ledger, the message is sent to the receiving bank, and the specific clearing and settlement service system of the receiving bank decrypts the specific stable coin to complete the transaction.

[0006] Further, one or more intermediate banks between the initiating bank and the receiving bank are deployed with the specific clearing and settlement service system for performing the clearing and settlement service for the bank(s) that do not deploy the specific clearing and settlement service system.

[0007] Further, the specific stable coin embeds DID information, including: transaction initiator information, transaction recipient information, transaction description, and AML / KYC information.

[0008] Further, the DID information further includes user behavior portrait, including: transaction type, transaction risk, and credit risk.

[0009] Further, a monitoring and auditing tool is provided for the transaction participants and / or authorized supervisory authorities to check the information of the specific stable coin Further, all parties involved in the blockchain transaction process are deployed with the specific clearing and settlement service system, and the transaction process is as follows: a. Initiation: the initiator sends the remittance message to the specific clearing and settlement service system; b. Verification: the specific clearing and settlement service system checks the message format, duplicate entries, digital signature legality, and business legality; c. Parsing and ledger update: the specific clearing and settlement service system checks whether the available balance of the specific stable coin in the initiator's account can meet the transaction amount, then parses the transaction information in the message as the basic transaction information of the blockchain ledger entry; the transaction currency is converted into the corresponding transaction amount of the specific stable coin; the blockchain address of the transaction party is the chain address of the initiating and receiving message; the encryption and decryption module encrypts the original transaction message to create an encrypted message, which is then used as input information in the blockchain ledger memo; d. Reception: when the receiving party's message processing module detects the block change of its blockchain address, the receiving party retrieves the new block information, passes it to the encryption and decryption module to decrypt the memo in the block transaction information, thereby obtaining the original message and forwarding it to the receiving party.

[0010] Further, the bank(s) that do not deploy the specific clearing and settlement service system perform the clearing and settlement service with the intermediate bank through a third-party clearing and settlement system; and initiate the blockchain-based transaction process between the intermediate bank and / or the bank(s) that deploy the specific clearing and settlement service system.

[0011] The present application has the following advantages: the decentralized, automated and transparent architecture of the blockchain provides an attractive alternative to the traditional system of SWIFT, especially for cross-border clearing and settlement. Despite the challenges, the ability of this technology to reduce costs, speed up settlement and enhance security makes it a key innovation for the future of global finance. With collaboration between institutions and regulators in terms of standards and scalability, blockchain can redefine the financial infrastructure, complementing or eventually replacing traditional systems such as SWIFT, as follows: Speed and efficiency: blockchain enables near-instant settlement (seconds / minutes) through peer-to-peer transactions, eliminating the need for a chain of correspondent banks. Smart contracts automate clearing (validation, reconciliation) and settlement, reducing human intervention.

[0012] Cost reduction: by eliminating intermediaries, blockchain significantly reduces transaction fees. Cross-border payments using stablecoins or central bank digital currencies (CBDCs) can further reduce foreign exchange costs.

[0013] Transparency and immutability: all participants have access to real-time transaction status on an immutable ledger, minimizing disputes and enhancing auditability.

[0014] Security: decentralization reduces single points of failure, and encryption ensures strong protection against fraud.

[0015] 24 / 7 availability: unlike SWIFT's batch processing and limited operating hours, blockchain operates continuously, aligning with the round-the-clock nature of global markets.

[0016] Blockchain's advantages in interbank cross-border clearing and settlement practices: smart contracts automate compliance (e.g., embedding AML / KYC rules) and enforce settlement terms. BRIEF DESCRIPTION OF DRAWINGS

[0017] The present application will be explained below in conjunction with the accompanying drawings.

[0018] Figure 1 is a system architecture diagram of the present application.

[0019] Figure 2 is a workflow of single transfer of member banks in the present application.

[0020] Figure 3 is a workflow of fund transfer through an intermediate bank in the present application.

[0021] Figure 4 is a workflow of fund share transfer management of member banks in the present application.

[0022] Figure 5 is a workflow of refund in the present application. DETAILED DESCRIPTION

[0023] The interbank cross-border clearing and settlement system (named Remi system) uses blockchain technology to facilitate information transmission between member banks, replacing the traditional centralized clearing and settlement network. The transfer of funds between member banks is carried out by transmitting Remi stable coins (called Remi Coin) and synchronizing KYC / AML information.

[0024] The Remi system supports 24 / 7 real-time interaction, making information transmission between member banks simpler, more efficient, and faster, especially in cross-border remittance scenarios compared to traditional clearing and settlement methods. The blockchain technology in the Remi system addresses the need for mutual trust and fairness between banks. This technology ensures that the Remi system is more secure, transparent, and traceable.

[0025] Remi system messages are compatible with SWIFT message formats and enhance the sharing mechanism of KYC / AML information, using encryption technology and distinguishing access rights for different relevant parties.

[0026] Interbank messages are transmitted as part of Remi stable coins. For privacy reasons, these messages must be encrypted, using W3C decentralized identifiers (DIDs) for user key generation, message encryption, and decryption. We propose a decentralized zero-knowledge proof (ZKP) payment layer built on top of Remi. We use the latest zero-knowledge virtual machine (zkVM) for user-side ZKP generation and on-chain ZKP verification, achieving high efficiency, low cost, and low latency.

[0027] The system architecture of the Remi system aims to facilitate seamless and efficient cross-border transactions between participating banks and financial institutions. The architecture consists of several key components that collectively ensure security, transparency, and speed in the clearing and settlement process, see Figure 1 .

[0028] • Blockchain ledger: The core of the system is a blockchain-based ledger that records all transactions. This distributed ledger ensures trust and transparency by providing an immutable record of all transactions processed by the Remi system.

[0029] • Specific stable coins (named Remi Coin): As part of the architecture, Remi Coin serves as a medium for value transfer between participants. These stable coins are pegged to fiat currencies, providing a reliable digital currency for transaction settlement.

[0030] • Switch module: A switch module is embedded in the banking system of each member bank or financial institution, routing different fund transfers to the SWIFT system or the Remi system.

[0031] • KYC / AML Module: The system includes a robust KYC (Know Your Customer) and AML (Anti-Money Laundering) module to ensure all transactions comply with regulatory requirements. This module securely collects, verifies, and shares relevant information with authorized parties.

[0032] • Specific Clearing and Settlement Service System (named REMI-Service): This is a functional component of the system responsible for message translation, encryption, and secure transmission of KYC / AML data. It is deployed between member banks to facilitate communication and interoperability.

[0033] • API (named REMI API): The architecture provides member banks with a standardized API for integration with the Remi system. This API allows for various functionalities such as querying account and transaction information, managing Remi Coins, etc.

[0034] • Security Layer: Strong encryption protocols and privacy measures are implemented to ensure the security of data transmission and storage. This includes message encryption using W3C DID standards and zero-knowledge proof transactions using zkVM.

[0035] • Monitoring and Auditing Tools (named Remi Scan): The architecture includes tools for real-time monitoring and auditing of transactions, which help ensure compliance and operational efficiency.

[0036] This system architecture leverages cutting-edge technology to provide a modern, secure, and efficient clearing and settlement platform for cross-border banking, enhancing traditional banking systems.

[0037] Transaction Process

[0038] References Figure 2 A customer remittance by a member bank is a remittance instruction sent by a Remi member bank on behalf of a remitting bank or a receiving bank, directly or through an intermediary bank, to another bank. This message format uses the SWIFT-MT103 format. In such transactions, at least one party (remitter or beneficiary) is a non-financial institution.

[0039] A customer remittance is a remittance transaction where at least one party (remitter or beneficiary) is a non-financial institution. A single initiated customer remittance transaction is settled using the REMI-COIN real-time settlement method. Member banks can initiate a "customer remittance message" (SWIFT MT103) to REMI on behalf of themselves or their agent banks to process such transactions.

[0040] Main Process Analysis: 1. Initiation: At any time the system is operational (24 / 7 support), the remitting bank initiates a "customer remittance message" to REMI.

[0041] 2. Verification: After receiving the message, REMI checks the message format, duplicate entries, digital signature legality and business legality. Business legality check mainly includes the bank code of the transaction bank, the status of the participating bank, business permission, etc. For the message passed the check, REMI further parses and performs other operations.

[0042] 3. Parsing and ledger update: After parsing the transaction information in the message, REMI checks whether the available balance of REMI-COIN in the initiator's direct participant account in the REMI system is equal to or greater than the transaction amount (available balance = account balance - frozen amount). If the available balance is sufficient, REMI parses the basic transaction information (such as sending and receiving banks, amount and currency) as the basic transaction information of the blockchain ledger entry. The transaction currency is converted into the corresponding REMI-COIN (for example, USD to RUSD, EUR to REUR), and the transaction amount corresponds to the amount of REMI-COIN. The blockchain address of the transaction party is the chain address of the member bank initiating and receiving the message in REMI, and the initiator is the sending address and the receiver is the receiving address. REMI encrypts the original transaction message to create an encrypted message, which is then used as input information in the blockchain ledger memo. This ensures that all transaction ledger information is recorded in the decentralized ledger, and through the memo information of the new block, the specified participants can decrypt and verify the original transaction information using a specific method.

[0043] 4. Receiving: When the system of the message recipient detects the block change of its blockchain address, it retrieves the new block information and decrypts the memo in the block transaction information to obtain the original MT103 message. The recipient then forwards this message to the receiving bank.

[0044] Single remittance to external bank Reference Figure 3 Single remittance to external bank in REMI system refers to a transaction in which at least one or both banks in the transaction are located outside the REMI member network. In this case, the REMI member bank acts as the role of an intermediate bank.

[0045] In fact, the single transfer process in REMI intermediate bank mode is the same as that between member banks. The difference is that the initiating member bank (initiator) and the receiving member bank (recipient) need to handle transaction information related to indirect participants. For REMI, transaction processing remains unchanged; only the transaction party information in the message is different.

[0046] Member bank fund share transfer management Reference Figure 4This refers to the transaction where the paying bank sends a message directly or through an agent to the receiving bank to transfer the REMI-COIN share to the receiving bank account.

[0047] The process of share allocation between member banks is the same as the process of single transfer between member banks. The main difference is that both banks participating in the allocation must be REMI member banks, and the message format is different from single transfer. Usually, single bank share allocation needs to use the SWIFT-MT202 message format.

[0048] Refund Reference Figure 5 The REMI system does not support direct rejection and return of single message transactions, but can be done by performing reverse transactions.

[0049] Freeze and unfreeze The freeze and unfreeze operation of REMI-COIN involves notifying REMI when the funds need to be frozen in the REMI special account within the bank. Position freeze refers to the situation where the member bank designates a certain proportion of its REMI-COIN settlement funds in the REMI system to be frozen and cannot be used, which means that the available REMI-COIN balance of the member bank initiating the request is equal to the total balance minus the frozen amount. Unfreeze refers to the release of the corresponding frozen amount. Freeze and unfreeze are executed through the REMI-API. This requires the use of a specific interface provided by the REMI-API. Operations through the REMI-API are recorded on the chain and reflected in REMI-SCAN, where specific freeze or unfreeze transactions can be queried.

[0050] Query The query interface can be integrated as needed. If not integrated, information such as accounts and transactions can still be accessed and viewed using REMI-SCAN.

Claims

1. A cross-border interbank payment and settlement system, characterized in that, Comprise: A specific clearing and settlement system, including a blockchain interaction device, an encryption and decryption module, and a message processing module; A specific stable coin for transmitting the value of legal tender and risk control information; A specific blockchain ledger deployed on the blockchain for providing an immutable record for all transactions; A switching module for routing between the blockchain network or the third-party clearing and settlement system; When initiating cross-border clearing and settlement between banks, the initiating bank sends a request to the switching module, and the bank switching module selects a network route; If the third-party clearing and settlement system is selected, the switching module routes to the third-party clearing and settlement system and completes the transaction with the receiving bank; If the blockchain route is selected, the blockchain transaction process is as follows: the transaction information is sent to the specific clearing and settlement system, the original transaction information is encrypted by the encryption and decryption module to generate a specific stable coin, the blockchain broadcast is executed by the blockchain interaction to be deployed to the specific blockchain ledger, and the message is sent to the receiving bank. The specific clearing and settlement system of the receiving bank decrypts the specific stable coin to complete the transaction.

2. The interbank cross-border payment and settlement system according to claim 1, characterized in that, One or more intermediate banks with the specific clearing and settlement system are set between the initiating bank and the receiving bank to perform clearing and settlement services for at least one bank without the specific clearing and settlement system.

3. The interbank cross-border payment and settlement system according to claim 1, characterized in that, The specific stable coin embeds DID information, including: transaction initiator information, transaction recipient information, transaction description, and AML / KYC information.

4. The interbank cross-border payment and settlement system according to claim 3, characterized in that, The DID information also includes a user behavior profile, including: transaction type, transaction risk, and credit risk.

5. The interbank cross-border payment and settlement system according to claim 3, characterized in that, A monitoring and auditing tool is provided for transaction participants and / or authorized regulatory authorities to check the information of the specific stable coin.

6. The interbank cross-border payment and settlement system according to any one of claims 1 or 2, characterized in that, Based on the blockchain transaction process, each party is deployed with a specific clearing and settlement system, and the transaction process is as follows: a. Initiation: the initiator sends a remittance message to the specific clearing and settlement system; b. Verification: the specific clearing and settlement system checks the message format, duplicate entries, digital signature legality, and business legality; c. Parsing and ledger update: the specific clearing and settlement system checks whether the available balance of the specific stable coin in the initiator's account can meet the transaction amount, then parses the transaction information in the message as the basic transaction information of the blockchain ledger entry; the transaction currency is converted into the corresponding transaction amount of the specific stable coin; the blockchain address of the transaction party is the chain address of the initiating and receiving message; the encryption and decryption module encrypts the original transaction message to create an encrypted message, which is then used as input information in the blockchain ledger memo; d. Reception: when the receiving party's message processing module detects a block change in its blockchain address, the receiving party retrieves the new block information and passes it to the encryption and decryption module to decrypt the memo in the block transaction information, thereby obtaining the original message and forwarding it to the receiving party.

7. The interbank cross-border payment and settlement system according to claim 6, characterized in that, Banks without the specific clearing and settlement system perform clearing and settlement services with intermediate banks through third-party clearing and settlement systems; And initiate a blockchain-based transaction process between the intermediate bank and / or the bank with the specific clearing and settlement system.

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