Funds Transfer Regulations - 2022 amendments: how should firms respond? (Regulation (EU) 2015/847)
Brexit-related amendments to the UK’s Funds Transfer Regulation come into force on 31 March 2022.
The amendments ensure the Funds Transfer Regulations operate effectively in a UK only context. EEA countries are treated no differently to other third countries while ensuring continuity of the UK’s existing regulatory treatment of Gibraltar.
The amendments to the Funds Transfer Regulations are subtle and don’t require firms to make wholesale changes to their Compliance framework, some effort is however required to achieve Compliance. UK Payment Service Providers now must provide the same level of information for EEA transfers as they would for non-EEA transfers.
The amendments
UK Payment Service Providers (PSPs) must now provide the same level of information identifying payers/payees when making electronic transfers of funds, regardless of whether funds are being transferred within or outside the EEA.
UK PSPs need to ensure transfers from the UK to the EEA exceeding EUR 1,000 are accompanied by the following information:
the name of the payer and payee
the payer’s and payee’s payment account number
the payer’s address, official personal document number, customer identification number or date and place of birth
As ever there are some caveats to the changes to be aware of:
where the funds being transferred do not exceed EUR 1,000, only the names and account numbers or a unique transaction identifier are necessary
if all the PSPs in the payments chain are established in the UK or Gibraltar, the payment account numbers of the payer and payee, or their unique transaction identifiers are required
if the PSP of the payee requests information from the PSP of the payer, within three working days the PSP of the payer must provide the PSP of the payee the full set of information as if the transfer had been made outside the UK/Gibraltar
What should firms do?
Assess whether payment platforms are compliant:
Identify across the types of payments executed, whether the platform and related systems enable payments to be accompanied by the new information requirements and whether the information can be used for screening purposes
Assess whether payment platforms can capture and block payments which aren’t compliant with the new regulatory requirements
Where compliance is not possible, firms should make and execute plans to achieve compliance and where applicable submit a breach notification to the FCA
Update policies, procedures, and guidance documentation:
Policies, procedures, and guidance documentation must be updated to reflect the amendments
Updates to a firm’s internal documentation should be signed off in line with its governance framework
Provide communications to staff on the what’s changed and why
Monitor compliance:
The changes to the regulations should be added into the scope of a firms Compliance Monitoring testing
Where firms process payments manually and do not have automatic payment blocks if information requirements are not fulfilled, firms should take additional care to identify and sample test in scope payments
As with any new product offered by firms, the changes to the regulations should be added to Compliance feasibility considerations when assessing whether a new product can be offered
As always, if you need any help or guidance, drop us a line contact@avyse.co.uk
