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Wolfsberg Group issues updated payment transparency standards

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The Wolfsberg Group has issued revised payment transparency standards that discuss best practices for addressing the growing complexity of global payments.

“Today, where one actor’s position in ensuring payment transparency starts and ends is no longer as clear-cut as when electronic payments were almost entirely initiated via a regulated bank…through SWIFT messages,” explained the group. “Legacy payment infrastructure handles increasing volumes of data, and understanding by all stakeholders (including supervisors) needs to improve on how new actors, pursuing unique payment models, challenge payment transparency requirements.”

Payment standards, audience, and key changes

According to the report, the new standards are relevant for the following industries:

  • Cross-border payments.
  • Domestic payments.
  • Fiat currencies.
  • Payments.
  • Debtor, intermediary, and credit agent payment service providers (PSPs).

The standards make several changes, including revising key terminology to encompass new types of PSPs – even those not regulated like traditional banks. It also clarifies the responsibilities of intermediary and beneficiary financial institutions (FIs), addresses some ways ISO 20022 may be able to support transparency, and provides diagrams to help the industry understand complex payment flows and their transparency challenges.

The standards lay out core responsibilities for critical payment sector stakeholders. These standards are extensive, but highlights include:

  1. Payment market infrastructures (PMIs) – PMIs are the systems that make payments possible, such as settlements. The standards encourage several responsibilities, including defining core transparency and due diligence responsibilities for PMI participants, the intermediation levels participants will allow, and payment types allowed.
  2. PSPs across the payment chain – Regardless of their role, all PSPs share certain core responsibilities. For example, they should not try to conceal creditor and debtor information from other involved PSPs. They should also ensure payment information is easy to understand for those involved and transparently communicate participants’ roles in the payment process.
  3. Debtor agent PSPs – These are the paying, or “ordering,” institutions. Their responsibilities involve including payment message information required by the Financial Action Task Force’s (FATF) Travel Rule, conducting customer due diligence (CDD) and compliant recordkeeping, and clearly identifying payments as either cross-border or domestic.
  4. Intermediary agent PSPs – These PSPs must ensure compliance with applicable regulators and, as far as possible, the FATF Travel Rule. They should also observe correspondence banking CDD principles for client PSPs and maintain risk-based anti-money laundering and combatting the financing of terrorism (AML/CFT) payment screening.
  5. Creditor agent PSPs – These firms should perform CDD on their customers, observe regulatory AML/CFT compliance, and screen payment messages for signs of suspicious activity.

Next steps

Firms in the payment services industry – especially those involved in the above relationships – are encouraged to benchmark their current transparency practices against the Wolfsberg Group’s standards. The full paper provides in-depth detail and helpful visuals for understanding transparency challenges for more complex payment structures in the sector. 

Firms may also want to consult the FATF’s Travel Rule, also known as Recommendation 16, to understand cross-border payment best practices better.

A Guide to AML for Cross-Border Payments & Remittance

Discover critical best practices for a better cross-border payment compliance program.

Download the Report

Originally published 27 October 2023, updated 08 February 2024

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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