A beneficiary financial institution should take reasonable measures to identify cross-border wire transfers that lack required originator or required beneficiary information. Complying with the new requirements will present some significant operational and compliance challenges for banks. Recommendation 16 applies to both cross-border and domestic wire transfers. Financial institutions (FIs) should include required originator/beneficiary information on wire transfers and related messages, and that information should remain with the wire transfer or related message throughout the payment chain 2. Intermediary financial institution refers to a financial institution in a serial or cover payment chain that receives and transmits a wire transfer on behalf of the ordering financial institution and the beneficiary financial institution, or another intermediary financial institution. 22. “For one thing, there have been limited penalties related to travel rule-like requirements, even though there has been legislation in place for a number of countries mandating certain information to travel with the transaction. Straight-through processing refers to payment transactions that are conducted electronically without the need for manual intervention. The EU and Singapore have already issued regulations that reflect Recommendation 16, and other FATF members—including the U.S.—are expected to follow. While much attention has been paid to issues such as know your customer (KYC) deficiencies and sanctions violations—and the sizeable penalties imposed as a result of these issues—the more fundamental issue of data quality is beginning to attract more focus. Open Google Chrome on your Android device and navigate to www.acamstoday.org. Information accompanying domestic wire transfers should also include originator information as indicated for cross-border wire transfers, unless this information can be made available to the beneficiary financial institution and appropriate authorities by other means. 16. Wire transfer refers to any transaction carried out on behalf of an originator through a financial institution by electronic means with a view to making an amount of funds available to a beneficiary person at a beneficiary financial institution, irrespective of whether the originator and the beneficiary are the same person. Such information need not be verified for accuracy, unless there is a suspicion of money laundering or terrorist financing, in which case, the financial institution should verify the information pertaining to its customer. Originator refers to the account holder who allows the wire transfer from that account, or where there is no account, the natural or legal person that places the order with the ordering financial institution to perform the wire transfer. 17. (c) to ordering, intermediary and beneficiary financial institutions to facilitate the identification and reporting of suspicious transactions, and to implement the requirements to take freezing action and comply with prohibitions from conducting transactions with designated persons and entities, as per the obligations set out in the relevant United Nations Security Council resolutions, such as resolution 1267 (1999) and its successor resolutions, and resolution 1373 (2001) relating to the prevention and suppression of terrorism and terrorist financing. What is FATF 16? Rather than adopting a ‘firefighting’ approach and tackling issues message by message, banks should take an analytical approach in order to find patterns and offenders and resolve issues at source. Where several individual cross-border wire transfers from a single originator are bundled in a batch file for transmission to beneficiaries, they may be exempted from the requirements of paragraph 6 in respect of originator information, provided that they include the originator’s account number or unique transaction reference number (as described in paragraph 7 above), and the batch file contains required and accurate originator information, and full beneficiary information, that is fully traceable within the beneficiary country. A further obstacle is the inconsistencies that may arise between different bank approaches to capturing data from customers. Required is used to describe a situation in which all elements of required information are present. If banks look at the quality of the data and fix any issues before the data hits the sanctions screening, transaction monitoring, KYC or anti-money laundering systems, then those systems will be able to operate much more effectively. This might mean that a transaction is stopped because of a lack of information that the upstream bank is not required by law or policy to collect,” he adds. Domestic wire transfers refers to any wire transfer where the ordering financial institution and beneficiary financial institution are located in the same country. The ordering financial institution should not be allowed to execute the wire transfer if it does not comply with the requirements specified above. 2. First and foremost, banks need to ensure that they understand the changes. The FATF Recommendations, published in 2012, consists of 40 recommendations. Collaboration can play an important part in improving consistency across the industry. (b) should file an STR in any country affected by the suspicious wire transfer, and make relevant transaction information available to the Financial Intelligence Unit. Ordering financial institution refers to the financial institution which initiates the wire transfer and transfers the funds upon receiving the request for a wire transfer on behalf of the originator. Subparagraphs 6(a), 6(b) and 6(c) set out the required originator information. However, by taking the steps needed to improve data quality, banks can also expect to see considerable benefits from the more effective use of sanctions filters to greater insights from business intelligence. Subparagraphs 6(d) and 6(e) set out the required beneficiary information. This term also refers to any chain of wire transfer in which at least one of the financial institutions involved is located in a different country. Internal controls should be enhanced to make sure that certain fields are populated with the right information. Indeed, complying with the existing requirements for originator information under SR7 is not necessarily straightforward, mainly because the data provided is unstructured. This should include talking to other banks, industry groups and regulators in order to understand the new rules and find out how others are responding. In this latter case, the ordering financial institution need only include the account number. While understanding an entity’s ultimate beneficial owner (UBO) has been a critical element of KYC for years, developments in the last few months have intensified focus on this area. The objective of the recommendation, as set forth in the FATF Recommendations, is to prevent “terrorists and other criminals from having unfettered access to wire transfers for moving their funds, and for detecting such misuse when it occurs.” 1 Recommendation 16 applies to both cross-border and domestic wire transfers. The information should be made available by the ordering financial institution within three business days of receiving the request either from the beneficiary financial institution or from appropriate competent authorities. The customer identification number refers to a number which uniquely identifies the originator to the originating financial institution and is a different number from the unique transaction reference number referred to in paragraph 7. Where technical limitations prevent the required originator or beneficiary information accompanying a cross-border wire transfer from remaining with a related domestic wire transfer, a record should be kept, for at least five years, by the receiving intermediary financial institution of all the information received from the ordering financial institution or another intermediary financial institution. “Recent events such as the publication of the Panama Papers has helped to speed up the release of proposed and final rules in the U.S. and the U.K. on formalizing UBO disclosure,” comments Daniel Tannebaum, a director in PwC’s Financial Crimes Unit and the leader of the Global Financial Services Sanctions Practice. This could include talking to the relevant bank and encouraging it to improve its standards. For qualifying wire transfers, a beneficiary financial institution should verify the identity of the beneficiary, if the identity has not been previously verified, and maintain this information in accordance with Recommendation 11. At the same time, with greater importance being placed on the issue of preventing terrorist financing, banks are seen as the front line to stop funds from falling into the wrong hands. Transfers should also include the originator’s name, account number and address, or other information to aid identification, such as their national identity number, customer identification number, and date and place of birth. Its CAMS certification is the most widely recognized anti-money laundering certification among compliance professionals. Yet, of the FATF’s 200 countries, only 35 jurisdictions reported their transposition of Travel Rule legislation, … This is underlined by the Financial Action Task Force’s (FATF) 2012 recommendations—particularly Recommendation 16—which specifies the need for financial institutions to provide information not just about the originator of a payment, but also the beneficiary.