The Financial Action Task Force today announced several revisions to its recommendation on payment transparency, which it said will enhance the safety and security of cross-border payments to better detect financial crime.
FATF is an intergovernmental body that in 2012 adopted a list of recommendations for international standards to combat money laundering and the financing of terrorism. Countries are encouraged to incorporate these recommendations into relevant laws and rules. The changes announced today for Recommendation 16, which was originally focused on wire transfers but now covers cross-border payments and other value transfers more broadly, will likely affect the Financial Crimes Enforcement Network’s funds travel rule in the future.
The changes “will ensure consistency of information required in payment messages to build a clearer picture of who is sending and receiving money, and help to eliminate fraud and error impacting customers,” FATF said in a statement.
The changes to the recommendation include:
- Clarified responsibilities within the payment chain. Under the new standard, the payment chain is considered to start with the financial institution which receives an instruction from the customer.
- Standardized information requirements. FATF is applying standardized and enhanced requirements on what information should accompany the payment messages for peer-to-peer cross-border payments above USD/EUR 1,000 (name, address, date of birth).
- Requirements to introduce tools that protect against fraud and error. The new standards will require financial institutions to make use of new technologies that protect against fraud and error, such as verification of recipients’ banking information.
- Clarification on card transactions. Transactions carried out using a credit, debit or prepaid card for the purchase of goods or services continue to be exempt from full R.16 requirements, but clarifications have been made to define the scope of “purchase of goods and services.”
The changes go into effect by the end of 2030. FATF said it will produce guidance and continue to engage with the private sector to help industry prepare for the changes.
In a separate statement, the Treasury Department endorsed the revised payment standards.
“The FATF plays an important role in the global fight to counter terrorism and proliferation financing,” Treasury Secretary Scott Bessent said. “We are encouraged by the FATF’s adoption of reports that respond to private sector demand for more actionable information to combat financial crime as well as modernizing its standards for domestic and cross-border payments.”
