How prepared are you?

The Instant Payments Regulation

November 04, 2024

By virtue of Regulation (EU) 2024/886 of the European Parliament and of the Council of 13 March 2024 – also known as the Instant Payments Regulation (the “IPR”) – all payment service providers (PSPs) offering standard credit transfer services must ensure that they are equipped to send and receive euro payments within seconds, on a 24/7 basis, across the EU. Seven months have passed since the publication of the IPR, and like all new pieces of legislation, its introduction brings forth both a wide spectrum of positive outcomes, as well as new challenges which must be overcome to fully reap its benefits.

Relevant Dates

Such PSPs are to note the following enforcement dates:

By 9 January 2025, these PSPs must be able to receive instant payments in euro; and
By 9 October 2025, these PSPs must offer the service of sending instant payments in euro and implement the verification of payee or the IBAN name check.

PSPs not falling within these parameters, such as electronic money institutions and payment institutions, are expected to meet the same requirements by 9 April 2027.

The IPR requires PSPs to enable clients to transfer their funds within 10 seconds at any time of the day, from any EU Member State to another, including the funds’ country of origin.

Notably, the brevity of the timeframe creates anti-money laundering and counter-financing of terrorism (AML/CFT) and compliance concerns, as there is uncertainty about how PSPs will be able to fulfil such a requirement in such a short time while subsequently performing sanctions screening and monitoring transactions in an efficient manner.

Under the IPR, PSPs shall carry out such verifications immediately upon the introduction or amendment of any targeted financial restrictive measures. Irrespectively, however, PSPs are required to keep a record of any alerts that were prompted, and the subsequent actions taken in compliance with the relevant legislation.

Not only does the IPR bring challenges in shifting to a daily sanctions screening system, but given the limited transaction processing time, there is an even greater need to have effective real-time transaction monitoring systems in place, which enable the timely identification of unusual and suspicious transactions, even during times of high transaction traffic. With the IPR’s implementation dates nearing, PSPs should aim to either test and boost their existing systems to reduce the number of false positives, or leverage on new and more efficient systems which are tailored to their specific needs.

How can we assist?

The presence of the right experts and tools is critical in complying with the new IPR in view of such a tight implementation timeframe. Our Financial Crime Compliance Team can assist in your sanctions screening and transaction monitoring efforts by testing and ensuring that your compliance framework is fully updated and compliant with the most recent legislation and regulatory updates.