WHAT SERVICES ARE COVERED BY AML/CTF OBLIGATIONS?
WHAT IS A RISK-BASED AML/CTF REGIME?
WHAT ARE THE ML/TF RISKS FACED BY PAYMENT SERVICE PROVIDERS?
Payment service providers captured by the AML/CTF obligations are those that provide services designated by the AML/CTF Act, including:
Providing an account
Permitting transactions on an account
Accepting electronic funds transfer instructions to remit funds
However, a significant proportion of the process undertaken by payment services providers is not currently a designated service under the AML/CTF Act.
The AML/CTF regime is risk-based, which means that your responses to the AML/CTF obligations placed upon you should be risk-based.
A risk-based AML/CTF regime requires that you understand and address the Money Laundering and Terrorism Financing (ML/TF) risks associated with the services you offer.
You must then design, implement and maintain systems, procedures and controls that are proportionate to your ML/TF risks.
Like other financial services and products, payment service providers can be abused for ML/TF purposes.
Funds used with payment service providers can be prepaid. This absence of credit risk means that service providers may not obtain full and accurate information about the customer and the nature of the business relationship.
Transactions can be carried out and funds withdrawn or converted much faster than through more traditional channels.
Many payment service providers’ business model relies on non-face to face business relationships and transactions, which present ML/TF risks due to increased impersonation fraud risk and the chance that customers may not be who they say they are.
WHY DO PAYMENT SERVICE PROVIDERS HAVE AML/CTF OBLIGATIONS?
Payment service providers connect merchants to the broader financial system so they can accept credit and debit card payments from customers. Payment service providers connect merchants, consumers, card brand networks and financial institutions.Whilst Payment Services are not specifically covered by the AML/CTF regime, some of the processes are services designated by the AML/CTF Act and Rules and therefore recognised as being vulnerable to use and abuse by criminals.
With over 50 years of expert knowledge and real world experience our AML/CTF compliance solutions will to help you navigate your legal and regulatory requirements so that your business complies with its AML/CTF obligations in the fastest and most cost-effective way.
Costos has a range of AML/CTF solutions to support your business in becoming AML/CTF compliant and maintaining compliance.
HOW CAN CUSTOS ADVISORY HELP?