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PSP Reporting Directive
Our end-to-end solution for reporting to CESOP
What is CESOP?
The new Directive will require PSPs to collect and report data on cross-border payment transactions, which will become effective as from 1 January 2024.
This reporting obligation was introduced as part of an EU-wide regime to detect and combat VAT fraud arising from cross-border e-commerce transactions.
The data will be stored in a new database, Central Electronic System of Payment information (CESOP), providing visibility to each Member State’s authorities.
Immediate Action Required
In-scope PSPs are required to collect and report data regarding cross-border payments undertaken as from 1 January 2024, with the first reporting date being 30 April 2024. The rules on the capturing of data are complex and typically involve the identifying and filtering of large amounts of data which needs to be analysed, captured and reported, potentially in multiple jurisdictions.
This will likely impose a significant obligation on the reporting and IT functions of PSPs in order to be able to collect and analyse all the data which needs to be reported. Different EU Member States impose different penalties for late or incorrect reporting. Given the relatively short time frame until this new Directive comes into effect, it is important for in-scope PSPs to adopt adequate solutions to be able to capture and submit the required data to the authorities.
Who falls within the scope of these reporting requirements?
The new rules apply to Payment Service Providers (PSPs). This refers to any of the categories of payment service providers listed in points (a) to (d) of Article 1(1) of Directive (EU) 2015/2366 (the Payment Services Directive - PSD2) and include any person or entity benefiting from an exemption under Article 32 of that Directive. The provisions also apply to PSPs incorporated in EEA countries and which have passported their licence in terms of PSD2.
Reporting entities include:
- Credit institutions
- E-money institutions
- Post office giro institutions
- Payment institutions
Your journey to CESOP compliance
The time and effort required to become compliant with the requirements of this new directive should not be underestimated. Our recommendation is that you should start working on aligning your processes and technology to ensure that you are able to deliver on this reporting requirement in a timely manner.
Throughout this journey, we can support you in various ways:
Impact Assessment
Our tax and legal experts can help you navigate the complexities of this new directive to assess the impact on your business. We suggest that organisations embark on this assessment at the earliest in order to have enough time available to implement any changes to processes and systems.
Data Assessment
Once you’ve identified the impact on your business, we can work with you to assess whether your systems are capturing all the data points needed to produce the CESOP reporting. Such an assessment will also provide visibility of any data quality gaps that may be persistent in your ecosystem that may hinder your reporting capabilities.
Integrated Solution
Our Solution will help you automate and streamline the end-to-end CESOP reporting process across the various Member States. The solution has been developed using the latest technology to provide for a highly scalable solution that is able to analyse large volumes of data and generate the required XML reports.
Our Integrated Solution
Our solution was developed by a team of experts that bring together the necessary regulatory, business and technology knowledge. The solution has been designed in a way to tackle all the reporting requirements to the CESOP in an automated manner, thus reducing the compliance burden on your teams.
Once upstream data is mapped into our data model, the solution will ingest the required data and perform the necessary validations, trigger the required business logic to identify reportable transactions, and produce the jurisdiction specific XML reports to be submitted to authorities in the respective Member States.
Key Features
Our solution focuses on addressing the business challenges created by this Directive by having the following two core modules:
1. Intelligent Rule Engine:
A scalable and intelligent solution that analyses large volumes of payment data and identifies reportable cross-border transactions as defined within the PSP Directive. The solution leverages on a sophisticated and flexible rule engine to aggregate payment data across your various products and determine in which Member State(s) you may have a reporting obligation. Our team has translated the business logic within the rules engine to enable the solution to accurately identify the cross-border payments in line with the various scenarios identified within CESOP guidelines.
2. Multi-Jurisdiction Report Generator:
Our solution simplifies the process of generating the required reporting by generating the required XML files that are fully compliant with the XSD of the CESOP, as well as any specific requirements that may have been issued by local authorities in the respective Member States. Our team of experts are constantly monitoring the requirements emanating from each Member State to ensure that these are embedded within the reporting layer of Our Solution. Furthermore, in-built data validations will ensure data integrity prior to it being forwarded to the respective authorities.
The solution is being developed in a modular manner to provide organisations with more options that cater to the needs. For example, an organisation may only need a reporting add-on to transform data from existing systems into an XML file that is aligned with the published XSD guidelines.
Some of the Key Benefits of using our solution:
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