EU Sets New Rules for Electronic Payment Instruments
The European Union has introduced new rules to prevent money laundering and terrorist financing through electronic payment instruments.
New Regulations
Under the new regulations, payment instruments such as prepaid cards and e-wallets will have a maximum amount of EUR 250 stored at any given time. This limit applies only to transactions that are not cash-based and are used exclusively for paying goods or services.
- To ensure the integrity of these transactions, payment instrument issuers must carry out sufficient monitoring of their transactions and contractual relations to detect unusual or suspicious activity.
- Redemption in cash or cash withdrawal will be limited to EUR 100 per transaction.
Customer Due Diligence Requirements
Financial institutions that issue prepaid cards and e-wallets must verify the identity of customers and beneficial owners, as well as conduct ongoing monitoring of business relationships and transactions. This includes:
- Verifying the identity of customers and beneficial owners
- Conducting ongoing monitoring of business relationships and transactions
- Applying customer due diligence measures to all new customers, including changes in the business relationship or individual aspects of it
Background
Money laundering and terrorist financing are significant threats to global stability and security. In recent years, there have been numerous cases of individuals using prepaid cards and e-wallets to launder money and finance terrorist activities.
Key Requirements
- Maximum amount stored in a payment instrument: EUR 250
- Limit on cash withdrawal or redemption: EUR 100 per transaction
- Customer due diligence requirements:
- Verify the identity of customers and beneficial owners
- Conduct ongoing monitoring of business relationships and transactions
- Apply customer due diligence measures to all new customers, including changes in the business relationship or individual aspects of it
Impact
The new regulations are expected to have a significant impact on the payments industry. Financial institutions will need to implement new systems and processes to comply with the regulations, which may require additional investment.
However, the benefits of these regulations far outweigh the costs. By preventing money laundering and terrorist financing, the European Union is taking an important step towards promoting global stability and security.
Conclusion
The European Union has introduced new regulations governing electronic payment instruments in an effort to prevent money laundering and terrorist financing. These regulations require financial institutions to implement strict customer due diligence measures and conduct ongoing monitoring of transactions. The impact of these regulations will be significant, but the benefits are clear: a safer and more secure payments system for all consumers.