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In 2015 the EU updated its rules and regulations around payments, with the aim of enhancing the processes designed to prevent terrorists and other criminals from accessing payment systems for transferring their funds (the Wire Transfer Regulations, also known as the Funds Transfer Regulations).
These rules came into effect in 2017 but in September of that year the European Supervisory Authorities also published guidance on how to apply the new rules. This guidance was intended to provide additional clarity to firms around detecting missing or incomplete information on the payer or the payee, what they should do when managing a transfer of funds that lacks the required information, or receive transfers of funds from a payment service provider that repeatedly fails to provide the required information.
UK Finance worked with members to review the draft guidance, to ensure it could be as beneficial as possible in helping to prevent terrorist financing. However, many member firms felt that there were some areas where additional clarity could be sought to help ensure the continued smooth running of the payment systems, and also to reduce unnecessary reporting based on misunderstandings rather than malpractice.
We worked with our members to put together a How To Guide for the Funds Transfer Regulation. This is a purely voluntary guide, but it helps to give firms a better understanding of how they might interpret the requirements of the Regulation and the ESAs Guidance, as well as the kinds of policies and procedures they could have in place to help to meet those requirements.
The industry takes its responsibilities for preventing criminal and terrorist financing very seriously, and this guide will help firms with these responsibilities. It doesn't stop here, however. This guidance will be reviewed periodically to ensure that it is still adding value for firms in the market, and that it is still accurate. In particular, in June 2018 the Bank of England published its consultation on its new ISO20022 message for the UK, the Common UK Credit Message (CCM). Our current guide reflects the structure of the CCM (for example, the use of names and addresses); however, there are some proposed new elements that, if accepted during the consultation process, will need to be factored in. Conclusion of the Brexit negotiations may also have an impact, and these will also be considered in due course.
Rhiannon Butterfield, Principal, Payments, UK Finance