Financial Crime World

European Union Regulation on Vigilance, Risk Assessment, and Reporting Suspicious Transactions

Vigilance and Risk Assessment

The European Union regulation emphasizes the importance of vigilance among payment service providers (PSPs) in detecting potential risks associated with transfers of funds. This includes being aware of transactions where information on the payer or payee is missing or incomplete.

Key Points:

  • PSPs should report such transactions to competent authorities as per Directive (EU) 2015/849 and national laws transposing that directive.
  • PSPs have an obligation to be vigilant and detect potential risks associated with transfers of funds.
  • Transactions with missing or incomplete information on the payer or payee should be reported.

Reporting Suspicious Transactions

Payment service providers have a crucial role in reporting suspicious transactions. This includes:

PSP Obligations

  • Payment service providers have an obligation to report suspicious transactions.
  • The provisions for reporting don’t supersede PSPs’ obligations to suspend and/or reject transfers that breach civil, administrative, or criminal law.

Guidelines for PSPs

To assist payment service providers in effectively detecting missing or incomplete information in transactions and taking follow-up actions, the European Supervisory Authority (European Banking Authority) should issue guidelines.

Prompt Action Against Money Laundering and Terrorist Financing

Payment service providers are expected to respond promptly to requests for information from authorities responsible for combating money laundering or terrorist financing. The timeframe for response is determined by the number of working days in the PSP’s Member State.

Record Keeping for Anti-Money Laundering Purposes

To facilitate investigations, payment service providers should keep records of information on the payer and payee for a period not exceeding five years. After this period, personal data can be deleted unless national law requires otherwise.

Enhanced Supervisory Measures and Sanctions

To improve compliance with anti-money laundering regulations, competent authorities’ powers to adopt supervisory measures and impose sanctions are enhanced. Administrative sanctions should be effective, proportionate, and dissuasive.

Implementing Powers

The Commission is granted implementing powers to ensure uniform conditions for the implementation of Chapter V of this regulation, to be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council.