Regulations Governing Cross-Border Payments
Regulations Governing Cross-Border Payments
With the increasing globalisation of the economy, the number of cross-border payments has increased significantly in recent years. The global cross-border payments market is expected to be worth USD$156 trillion in 2022.
PYMNTS recently conducted research that outlined several key pain points for US and UK companies doing cross-border business. The top concerns were payment fraud (56 per cent), followed by data security (54.6 per cent). Overall, cross-border payments are subject to various regulations that aim to ensure the smooth and efficient functioning of the international payment system. National governments, central banks, and international organisations set these regulations.
- Anti-money laundering (AML) laws require financial institutions to verify the identity of their customers and report suspicious transactions to prevent and detect money laundering.
- The Anti-Money Laundering Directive (AMLD) sets out rules and standards to prevent money laundering and terrorist financing.
- Counter-Terrorist Financing (CTF) regulations require financial institutions to implement measures to prevent and detect terrorist financing.
- The Know Your Customer (KYC) regulations require financial institutions to collect and verify customer information to prevent fraud and money laundering.
- The General Data Protection Regulation (GDPR) protects the personal data of individuals within the European Union (EU). It sets out requirements for collecting, processing, and storing personal data.
- The Office of Foreign Assets Control (OFAC) regulations prohibit transactions with designated countries, individuals, and entities.
- The Financial Action Task Force (FATF) Recommendations provide international standards for combating money laundering and terrorist financing.
Conclusion
The rapid pace of changing regulations can become overwhelming for any business to manage. Staying vigilant and updated has become crucial to adhere to the regulatory landscape. We hope this article gives you a primer into the current regulations your business needs to stay compliant with and administer efficiently. For more information about the latest developments within regulatory frameworks, get in touch with a cross-border payment solutions team now!
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