EU Money Transfer
Regulation:
Overview
You’re a ‘Payment Service Provider’
if your business provides transfer of funds services within the EU. That means
you are covered by the EU Payments Regulation and the Transfer of Funds
Regulations.
The EU Payments Regulation sets out
rules about the information on the payer that must be sent with transfers of
funds. The aim of these rules is to prevent, detect and investigate money
laundering and terrorist financing.
You must comply with the Money Laundering Regulations if your business is a
Money Service Business. By complying with these regulations you’ll already be
meeting some of the requirements of the EU Payments Regulation.
This guide tells you about the EU
Payments Regulation, who it applies to and what you need to do to comply with
it. It also tells you about the penalties for not complying with it.
The EU Payments Regulation
The EU Payments Regulation sets out
rules for the information about the payer - the person transferring the funds -
that has to be sent with a ‘transfer of funds’. A transfer of funds is any
transfer that the payer makes through a Payment Service Provider to make funds
available for collection at a Payment Service Provider, if at any stage in the
process the money is moved electronically, for example by fax or email.
The payer can transfer funds from one
bank account to another, or they can give the funds they want to transfer to
the Payment Service Provider in cash, by cheque or by credit card. The funds
can then be transferred electronically using SWIFT (Society for Worldwide
Interbank Financial Telecommunications) or transmitted in another way.
When a Payment Service Provider
transfers funds they must normally send ‘Complete Information on the Payer’
with the transfer. This allows the authorities to trace payments if necessary.
If the Payment Service Providers used
by the payer and the person receiving the funds are both within the EU then,
unless full details are requested, the sender need only give the account number
of the payer or another unique identifier selected by the Payment Service
Provider.
Who the EU Payments Regulation apply
to
You must comply with the EU Payments
Regulation rules when you transfer funds if you’re a Money Service Business
operating as a Payment Service Provider in the EU. The rules apply to all
transfers of funds in any currency that you send or receive.
What to do with the Complete
Information on the Payer
You must have Complete Information on
the Payer (the payer is the person transferring the funds) when you make or
receive any transfer of funds.
This means you’ll need:
·
the name of the payer
·
the payer’s address - or their date and place of birth
·
either their customer identification number, which is provided by the
payment service provider, or a national identity number (which is usually their
passport number)
·
the payer’s account number or a unique identifier which allows the
transaction to be traced back to them
You may also need to verify this
information in some cases. You verify the information using documents, data or
information from a reliable and independent source such as:
·
a passport
·
a photocard driving licence
·
documents issued by a government department
One-off transfers of under €1,000
You do not need to verify the
information the payer gives you if the transfer is a one-off payment and you
think it’s unlikely to become regular business.
Linked transactions
You’ll still need to verify the
Complete Information on the Payer if the amount of the funds to be transferred
is less than €1,000 and:
·
there are several transactions which appear to be linked
·
the linked transactions, when added together, exceed €1,000 or the
equivalent in another currency
One-off transfers of €1,000 or more
You must verify the Complete
Information on the Payer for one-off transfers of €1,000 or more. You must do
this before you make the transfer.
Regular transfers - business
relationship
You’ll need to verify the Complete
Information on the Payer if you’ll be handling transfers for a payer on a
regular basis and you develop a ‘business relationship’.
When you have verified the
information once you don’t have to do so for every transaction. Instead you’ll
need to verify it at regular intervals. How frequently you do it is up to you
as it will depend on your assessment of the risk.
Ensure that Complete Information on
the Payer is sent with the transfer
You must send the Complete
Information on the Payer to the Payment Service Provider acting for the person
receiving the funds - the payee - if you’re acting as Payment Service Provider
for the payer and you’re transferring funds outside the EU.
You’ll only need to send either the
account number or a unique identifier, which allows the transfer to be traced
back to the payer, if the payee’s Payment Service Provider is within the EU.
You must make sure you receive the
Complete Information on the Payer from the payer’s Payment Service Provider if
you’re acting as Payment Service Provider for the payee. You should ask for it
or consider rejecting the transfer if you don’t receive it.
If you deal regularly with a Payment
Service Provider who fails to send the Complete Information on the Payer, you
could consider warning them or setting deadlines to make sure you receive it.
If they still fail to send the Complete Information on the Payer, you might
decide to restrict or end your business relationship with them.
Missing or incomplete Complete Information on the Payer might be an
indication that the transfer of funds is suspicious and should be reported to the Serious Organised Crime Agency.
Record keeping
You must keep all your Complete
Information on the Payer records for 5 years
You must make sure you keep with the
transfer all the information you received with it if you’re an Intermediary
Payment Service Provider. This means you’re involved in the transfer of funds
but you’re neither the payer’s nor the payee’s Payment Service Provider.
How the EU Payments Regulation links
in with Money Laundering Regulations
Some people have to apply for what’s known as a ‘fit and proper’ test before their business can be
registered under the Money Laundering Regulations.
HM Revenue and Customs (HMRC) may
cancel your registration if you keep failing to comply with the EU Payments
Regulation, as you may no longer be accepted as a fit and proper person.
You can read the full text of the EU Payments Regulation on the Europa website.
Third party payments
Third party payments are money
transmissions where the receivers of the money remittance order(s) are based in
one country, but where settlement for the order(s) is made by the payment of an
invoice to a beneficiary (often in another country). This is sometimes
described as ‘third party pooling’ or ‘cover payments’. This type of remittance
and settlement involves 2 separate transactions, each of which requires the
appropriate customer due diligence or enhanced due diligence.
Under the Money Laundering
Regulations the settlement of a debt by means of an offset payment is a
separate transaction. Your customer is the overseas recipient (for example, a
Money Service Business or similar local payment service provider) which pays out
the money remittance orders to the individual receiver(s) and which then
requests settlement of an invoice to be made to the beneficiary (the ‘third
party’).
These transactions are high risk. You
should make sure your risk assessment includes indicators of risk and seriously
consider if you should apply enhanced due diligence on the overseas recipient.
You should think about asking for and verifying additional documents, data or
information to satisfy yourself about the identity of the overseas recipient of
the payment. You should also keep records of settlement accounts.
Where the payment is to be made
against an invoice you should check that the document is genuine. This could
include checking if the:
·
name and address of the purchasing business are correct
·
supplier exists
·
description of the goods is credible
·
value of the goods is realistic
You should seek further evidence if
you have any level of doubt about the invoice, and check that it is genuine by
getting supporting documentation such as movement certificates, shipping
orders, packing lists and/or bills of loading.
Third party payments exclude
circumstances where payment is made to a beneficiary in the UK or elsewhere on
the instructions of an overseas customer which does not involve offset of a
payment. In this situation the Money Service Business in the UK needs to do the
appropriate level of customer due diligence on the overseas customer.
To help clarify what category a payment falls into, HMRC has
prepared flowcharts to illustrate third-party and non-third party payments.
Money transmissions from overseas
into the United Kingdom - inward remittances
These occur when a customer outside
the UK wishes to carry out a transfer of funds to a beneficiary in the UK.
The location of the customer does not
affect your need to perform customer due diligence. You must apply customer due
diligence and where appropriate, ongoing monitoring if an overseas customer
deals directly with you in the UK.
Where the transfer of funds is sent
to you from an overseas Money Service Business you must treat them as your
customer. Where you are receiving a bulk transfer (where the transfer
represents a collection of underlying transactions) the situation is high risk.
You should consider if you need to carry out enhanced due diligence.
At the very least you must obtain the
number of underlying transactions of each bulk transfer made to you by your
customer. This information will allow you to monitor that the number and
average value of transactions is consistent with the anticipated level of
activity when you began your business relationship. It will also give you an
indication of risk, particularly where the number of transactions or the
average transaction value is significantly above what you expected.
You should make a note of their
explanation where you are not satisfied with the reasons provided by your
customer, record why they say the average transaction value has increased and
check that they have carried out appropriate customer due diligence. You will
need to decide if it is necessary to make any further checks before you decide
whether to accept the transaction.
Where the transfer of funds is
included in any sort of ‘offset arrangement’ (where you pay the beneficiary
from your own funds and the debt owed to you by the overseas Money Service
Business is satisfied by a payment from them to a third party at your
instruction) this is a separate, potentially high risk transaction. You must
perform customer due diligence and if appropriate enhanced due diligence checks
on the overseas Money Service Business. Based on your assessment of the risk
this should include checking some specific transactions where you have
instructed the overseas Money Service Business to make a payment to a third party.
You must also check if complete
information on the payer is present and in the case of missing or incomplete
information, reject the transfer or ask for the missing information.
Penalties for not complying with the
EU Payments Regulation
The Transfer of Funds Regulations give HMRC the power to charge a penalty if a business fails to comply
with the EU Payments Regulation.
When HMRC visits your business to check that
you’re complying with the Money Laundering Regulations it will also check that
you’re complying with the EU Payments Regulation.
Contacting HMRC
If you need more information on the EU Payments Regulation, or you have
any queries about how to comply with it, you can contact HMRC.
Source: Gov UK
URL: https://www.gov.uk/guidance/how-to-comply-with-eu-payments-regulation#the-eu-payments-regulation
Time: 18:18:00 GMT
Date: 31/10/2015
Source: Gov UK
URL: https://www.gov.uk/guidance/how-to-comply-with-eu-payments-regulation#the-eu-payments-regulation
Time: 18:18:00 GMT
Date: 31/10/2015
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