Response to consultation on Guidelines to prevent transfers of funds can be abused for ML and TF
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SWIFT believes that a time-frame of six months will have a consequential impact on the performance of payment systems. On a daily basis, financial institutions typically process millions of messages. Storing, indexing, searching and tracing every such qualifying payment message back against a six-month backlog will significantly impact transaction processing times and associated costs.
SWIFT believes it would be beneficial to the payment industry if requesting the missing information would happen in a standardised and automated fashion. This would allow the sending PSPs to automate any incoming requests and required action, for example contacting the payer and asking for the relevant information. Equally such standards and automated processes would help the PSPs to automatically administer outstanding requests and reconcile responses.
We also believe that the applications checking and monitoring the quality of outgoing and incoming transactions should be able to store the transactions that fail to comply, along with the related rationale, allowing for easy retrieval. Additionally, such applications should be able to generate user-friendly reports and statistical information across transactions and PSPs.
Question 1: Do you agree with the general considerations in Chapter 1? In particular, do you agree that these are necessary to ensure an effective, risk-based and proportionate approach to complying with Regulation (EU) 2015/847? If you do not agree, clearly set out your rationale and provide supporting evidence where available. Please also set out what you consider to be the common principles that apply to both, the PSP of the payee and the intermediary PSP, and why.
The ESAs have clearly documented that to benefit from the exemptions for transfers of funds that do not exceed EUR 1 000, PSPs must put in place systems and controls to detect transactions that appear to be linked. In the guidelines, linked transactions are defined, at least, as those transactions that are sent from the same payment account or the same payer to the same payee and within a short time-frame, for example within six months.SWIFT believes that a time-frame of six months will have a consequential impact on the performance of payment systems. On a daily basis, financial institutions typically process millions of messages. Storing, indexing, searching and tracing every such qualifying payment message back against a six-month backlog will significantly impact transaction processing times and associated costs.
Question 2: Do you agree that the expectations on intermediary PSPs and PSPs of the payee in Chapter II are proportionate and necessary to both comply with Regulation (EU) 2015/847 and ensure a level playing field? In particular, do you agree with: • The steps PSPs should take to detect and manage transfers of funds with missing information of inadmissible characters or inputs? • The steps PSPs should take to detect and manage PSPs that are repeatedly failing to provide the required information? If you do not agree, clearly set out your rationale and provide supporting evidence where available. Please also set out at what you believe PSPs should do instead, and why.
In the Guidelines the ESAs have documented the obligations on the intermediary PSPs and PSPs of the payee. We understand that when a PSP chooses to suspend the transfer of funds, it should ask the sending PSP to supply the information on the payer or the payee that is missing, or to provide that information using admissible characters or input. Also when asking for missing information the PSP should set a reasonable timeframe within which the sending PSP should respond.SWIFT believes it would be beneficial to the payment industry if requesting the missing information would happen in a standardised and automated fashion. This would allow the sending PSPs to automate any incoming requests and required action, for example contacting the payer and asking for the relevant information. Equally such standards and automated processes would help the PSPs to automatically administer outstanding requests and reconcile responses.
We also believe that the applications checking and monitoring the quality of outgoing and incoming transactions should be able to store the transactions that fail to comply, along with the related rationale, allowing for easy retrieval. Additionally, such applications should be able to generate user-friendly reports and statistical information across transactions and PSPs.