SANCTIONS
Instant payments cannot be frozen , and the solution would be to adapt the transaction monitoring system to screen transactions post-payment . However , this could still be an issue when it comes to cross-border transfers . While PSPs could freeze accounts if suspicious activity is detected , the time it takes to notify authorities and act on crossborder payments means that criminals could transfer the money elsewhere before any action can be taken .
The IPR does not cover these issues and there is currently no guidance from the EU . 15 It is up to the PSP to determine how to solve these issues .
A sanctions screening revolution
From system overhauls to meeting strict deadlines and addressing gaps in current compliance processes , the early stages of implementing the IPR were far from easy . However , past the initial hurdles , the shift to customer-level sanctions screening should become more manageable , allowing the benefits to outweigh the challenges .
In the lead-up to the next major IPR deadline in October , PSPs should prioritize the necessary adjustments to their sanctions screening . This includes enhancing and updating all data on their customers , ensuring accurate and up-to-date records , upgrading their screening tools , leveraging the use of artificial intelligence or machine learning tools if possible , and collaborating with external experts such as consultants .
To ensure the ongoing success of the regulation , it is important that the EU provides clearer guidance , especially on matters such as the handling of sanctioned payment references and post-payment monitoring . PSPs and EU lawmakers would benefit from collaborating to develop solutions that improve sanctions screening at all levels .
Conclusion
There is no doubt that the IPR is driving a transformative shift in sanctions screening . As with every change , challenges are inevitable , but the new regulation is offering opportunities never seen before in the financial landscape . It will be interesting to see how it will further evolve . There is no doubt that the IPR is driving a transformative shift in sanctions screening
Stefano Siggia , CAMS , senior consultant , Pideeco , Belgium , stefano @ pideeco . be ,
1
David Savage . Daniel Martin and James Neale , “ SEPA and Instant Payments : Sanctions Compliance Between a Rock and a Hard Place ?” HFW , October 18 , 2024 , https :// www . hfw . com / insights / sepa-and-instantpayments-sanctions-compliance-between-a-rock-and-a-hard-place /
2
“ Is Europe Ready for Instant Payments ? 3 Challenges Banks Face ,” RedCompass Labs , https :// www . redcompasslabs . com / insights / is-europe-ready-for-sepa-instant-payments-challenges /
3
Ibid .
4
David Savage . Daniel Martin and James Neale , “ SEPA and Instant Payments : Sanctions Compliance Between a Rock and a Hard Place ?” HFW , October 18 , 2024 , https :// www . hfw . com / insights / sepa-and-instantpayments-sanctions-compliance-between-a-rock-and-a-hard-place /
5
“ Regulation ( EU ) 2024 / 886 ,” European Union , March 13 , 2024 , https :// eur-lex . europa . eu / legal-content / EN / TXT / HTML /? uri = OJ : L _ 202400886
6
“ What is Batch Sanction Screening ?” Optimalscan , January 31 , 2024 , https :// optimalscan . com / en / blogs / batch-sanction-screenings /
7
Adrian Murphy , Kate Robu and Matthew Steinert , “ The investigator-centered approach to financial crime : Doing what matters ,” McKinsey & Company , June 1 , 2020 , https :// www . mckinsey . com / capabilities / risk-and-resilience / our-insights / the-investigator-centered-approach-to-financial-crimedoing-what-matters
8
“ Regulation ( EU ) 2024 / 886 ,” European Union , March 13 , 2024 , https :// eur-lex . europa . eu / legal-content / EN / TXT / HTML /? uri = OJ : L _ 202400886
9
“ Remarks by Commissioner McGuiness at the Press Conference on the Commission ’ s Proposal for a Regulation on Instant Payments ,” European Commission , October 25 , 2022 , https :// ec . europa . eu / commission / presscorner / detail / en / STATEMENT _ 22 _ 6410
10
Ibid .
11
“ Fuzzy Matching in Financial Compliance : Techniques and Challenges ,” Financial Crime Academy , https :// financialcrimeacademy . org / fuzzy-matching-in-financial-compliance /
12
David Savage . Daniel Martin and James Neale , “ SEPA and Instant Payments : Sanctions Compliance Between a Rock and a Hard Place ?” HFW , October 18 , 2024 , https :// www . hfw . com / insights / sepa-and-instant-paymentssanctions-compliance-between-a-rock-and-a-hard-place /
13
“ Is Europe Ready for Instant Payments ? 3 Challenges Banks Face ,” RedCompass Labs , https :// www . redcompasslabs . com / insights / is-europe-ready-for-sepa-instant-payments-challenges /
14
Ibid .
15
David Savage . Daniel Martin and James Neale , “ SEPA and Instant Payments : Sanctions Compliance Between a Rock and a Hard Place ?” HFW , October 18 , 2024 , https :// www . hfw . com / insights / sepa-and-instantpayments-sanctions-compliance-between-a-rock-and-a-hard-place /
58 acamstoday . org