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May 2017

The fast-approaching EU Funds Transfer Regulation 2015 (FTR 2015) – which becomes applicable on June 26, 2017 – leaves significant room for interpretation, and therefore brings more significant challenges than initially meet the eye. Of course, even seemingly small ambiguities can affect how you build your operations and processes around the regulation.

FTR 2015 sets out to ensure traceability of payments transactions – a powerful tool in the prevention, detection, and investigation of money laundering and terrorist financing. Yet, a lack of clarity and focus could harm the effectiveness of the regulation in achieving its objective.

The issue is, if the requirements are unclear or open to interpretation, disruptions to payment flows or unintended breaches of the regulation may likely occur, as well as a fragmentation of the regulatory landscape. This may not only lead to a negative impact on individual banks, but also on senior managers who are personally liable for the organisation’s controls.

In April, the European Supervisory Authorities issued draft guidelines to coincide with a public consultation period, which runs until June 5, 2017. While these guidelines have provided some clarity, they remain limited in scope as they do not aim to achieve maximum harmonisation. As such, it is still unclear what Payment Service Providers (PSPs) must do to comply. A common understanding among financial institutions and regulators of the scope and requirements of FTR 2015 is therefore vital.

With this in mind, the whitepaper intends to contribute towards the ongoing dialogue among financial institutions and regulators around how to ensure the regulatory requirements are crystal clear.

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