Credits: Alok Rustogi and Yee Wong on their answers in Quora
MUG is a group of institutions who are able to send and receive a particular type of FIN message, for e.g. MT 103.
All the users belonging to MUG of MT 103 will be able to send and receive MT103 messages.
Consider each individual in the above group as an institution belonging to a MUG of MT103. Only above individuals(institutions) are allowed to send/receive MT103 over SWIFT network.
However if a new institution wants to send/receive MT103, they will have to complete the process of joining the above group (MT103 MUG) which will make them a part of MUG.
After joining the MUG there is another process called RMA which an institution must establish with each individual before it can actually send and receive messages.
If you are a Financial Institution (FI) then you would normally have to exchange RMA (Relationship Management Application) keys which will allow you to send to another party - they will then approve/reject and may send a reciprocal request.
For Corporates, typically they need to be sponsored by a bank (to join MA-CUG or SCORE). A MA-CUG (Member Administered Closed User Group) is managed by the bank, so if a Corporate has multiple banking relationships they would need to join multiple MA-CUG. The bank will administer who can join and what they can send within the group.
SCORE is an updated version of MA-CUG which simplifies the process. A Corporate would still need to be sponsored by a bank, but the barrier is less for each additional bank.
Below is formal definition of MUG and FIN from swift’s website.
Message User Group / MUG
A group that FIN users must belong to if they want to receive a particular category of standard messages, or specific message types. Users that have not registered for a particular Message User Group cannot send or receive the messages specified for use in that Message User Group.
FIN
/messaging application/ The financial messaging application, which together with the General Purpose Application, makes up the FIN service. /messaging service/ The messaging service that enables the secure and reliable exchange of MT messages in store-and-forward mode. User-to-user, user-to-SWIFT, and SWIFT-to-user messages are sent and received within the FIN service (that is, within both the General Purpose Application and the FIN application)
Some additional helping information regarding SWIFT product
SWIFT – a secure and reliable mode of payment
What and Why? SWIFT is a community formed by and for the financial industry. Its main role is:- to provide a platform for customers to exchange financial information securely and reliably; and to act as a catalyst that brings financial institution together to work collaboratively.
SWIFT Products
SwiftNet Link (SNL) – it is a s/w that is installed on swift customer’s site and opens a connection to connect with SwiftNet.
Alliance gateway (SAG) – it is a software that allow other application to use SNL to connect with SwiftNet. It allows you to concenrtate and manage the flows of multiple messaging interfaces through one single interface, connecting to the SWIFT network via a single SWIFTNet Link instance, which takes care of the lower level protocol stack.
Alliance Webstation (SAB) – desktop interfaces to SAG.
Alliance Access (SAA) – is the main messaging software by SWIFT, which allows message creation only for FIN messages, but routing and monitoring for FIN and MX messages. The main interfaces are FTA (files transfer automated, not FTP) and MQSA, a WebSphere MQ interface.
Alliance Workstation (SAW) – is the desktop software for administration, monitoring, and FIN message creation.
Alliance Web Platform (SWP) – as the new thin-client desktop interface provided as an alternative to existing Alliance WebStation, Alliance Workstation (soon), and Alliance Messenger.
Alliance Lite2 – is a secure and reliable, cloud-based way to connect to the SWIFT network
Alliance Integrator– Alliance Integrator is an add-on for Alliance Access that helps connect your business applications to SWIFT with a minimum effort. Integrator allows you to minimize the modifications required in your back-office applications, reducing the time and cost related to the deployment of business solutions over SWIFTNet.
