Payment System Regulatory Compliance

🚨📝 27 NOV 2025. #PSD3 #PSR #Payments. EU lawmakers just agreed on PSD3 + the new Payment Services Regulation (PSR) - a major overhaul of how payments, fraud prevention and data access will work across Europe. One message stands out: if a provider fails to prevent fraud, they pay for it. 🔍 Key Takeaways: ▶️ PSPs carry the fraud bill. If a provider doesn’t implement proper fraud controls, it must cover the full customer loss. This includes impersonation scams, as long as the victim reports it. ▶️ Name-IBAN checks become mandatory. If the payee name doesn’t match the identifier, the PSP must stop the transfer and alert the payer. ▶️ Receiving PSPs must freeze suspicious inflows. They become the choke point for detecting mule accounts. ▶️ Online platforms face liability too. If they fail to remove flagged fraudulent content, they must reimburse PSPs that refunded victims. This closes a major DSA loophole. ▶️ Customers get real humans. Not just chatbots. PSPs must provide access to human support for fraud issues. ▶️ Cash access gets a boost. Shops will be able to offer €100–150 withdrawals, without forcing you to buy anything. A big win for rural areas. ▶️ Open banking barriers fall. Banks can’t block or discriminate against AIS/PIS providers. A list of “forbidden obstacles” will enforce real #OpenBanking. ▶️ Device makers must open up payment interfaces. Mobile and electronic service providers must let apps store and transfer payment data on fair terms. ▶️ Crypto gets a shortcut. #CASPs authorised under #MiCA can access a simplified licensing path when offering payment services. ▶️ Clearer fees. Currency conversion, ATM costs, and all charges must be shown up-front, before the payment is made. 🤷♂️ The So What? #Compliance #Fintech should: ✅ Rebuild fraud frameworks, especially around impersonation, risk scoring, authentication and mule monitoring. ✅ Prepare for stricter liability, with enhanced logging, evidence retention and customer support training. ✅ Check open banking readiness, including APIs, permission dashboards and non-discriminatory access rules. 📩 How are your teams preparing for PSD3/PSR’s fraud-liability shift? Curious to hear practical views from PSPs and fintech founders. #PSD3 | #PSR | #Payments | #FraudPrevention | #Fintech | #OpenBanking | #FinancialServices | #Regulation | #EUlaw

In the first half of 2024, £571 million was lost to card payment fraud in the UK alone, much of it driven by scams on social media. Fraud has clearly evolved, adopting more modern and sophisticated tactics. In payment, one standard governing how card data is protected, namely how it is stored, processed, and transmitted, is the PCI DSS directives. The Payment Card Industry Data Security Standard was created in 2004 and has been the backbone of payment security for nearly 20 years. This year marks a big shift. Its latest version, PCI DSS v4.0, will become mandatory in March 2025. This is the first major update in over a decade, so worth taking a closer look at the key changes. Overall, PCI DSS v4.0 focuses on critical aspects such as encryption, authentication, network segmentation, and vulnerability testing, ensuring businesses are better equipped to handle the 'modern' security threats that are increasingly sophisticated too. ◾As such one of the key changes is the introduction of a flexible compliance approach. This means merchants can choose security measures that best fit their specific needs and risks. This approach is well-aligned with how businesses today manage their security challenges. In the same way that authentication frameworks are becoming more adaptive to varying levels of risk, other security measures are also evolving to be more context-specific and scalable. ◾Another key update focuses on the Stronger Authentication framework. Multi-factor authentication (MFA) is now mandatory for all accounts accessing sensitive payment systems, including remote administrative access. Specifically, MFA is required for all accounts that interact with the Cardholder Data Environment (CDE). ◾Stronger encryption and better key management are now essential. Businesses must use modern encryption methods instead of outdated ones. They also need to improve how encryption keys are created, shared, and stored to reduce the risk of data breaches and unauthorised access. ◾Given the industry’s shift towards real-time data processing, the latest guidelines also encourage automated monitoring and the use of tools that enable businesses to detect and flag non-compliance in real time. 👉🏽#Paymentexperts any perspectives to share on #pcidss🎙️? --- 𝑾𝒐𝒏𝒅𝒆𝒓 𝒘𝒉𝒐 𝒘𝒆 𝒂𝒓𝒆? 𝑊𝑒 𝑎𝑟𝑒 𝑎 𝑡𝑒𝑎𝑚 𝑜𝑓 𝑃𝑎𝑦𝑚𝑒𝑛𝑡𝑠 𝑆𝑡𝑟𝑎𝑡𝑒𝑔𝑖𝑠𝑡𝑠, 𝑏𝑙𝑒𝑛𝑑𝑖𝑛𝑔 𝑐𝑜𝑟𝑒 𝑡𝑒𝑐ℎ𝑛𝑖𝑐𝑎𝑙, 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑎𝑙, 𝑎𝑛𝑑 𝑐𝑜𝑚𝑚𝑒𝑟𝑐𝑖𝑎𝑙 𝑒𝑥𝑝𝑒𝑟𝑡𝑖𝑠𝑒 𝑤𝑖𝑡ℎ 𝑎 𝑐𝑟𝑒𝑎𝑡𝑖𝑣𝑒 𝑎𝑝𝑝𝑟𝑜𝑎𝑐ℎ. 𝑊𝑒 𝑎𝑠𝑠𝑖𝑠𝑡 𝑐𝑙𝑖𝑒𝑛𝑡𝑠 𝑡ℎ𝑟𝑜𝑢𝑔ℎ 𝐶𝑜𝑛𝑠𝑢𝑙𝑡𝑖𝑛𝑔, 𝑆𝑡𝑟𝑎𝑡𝑒𝑔𝑦, 𝑅𝑒𝑠𝑒𝑎𝑟𝑐ℎ, 𝑎𝑛𝑑 𝑇ℎ𝑜𝑢𝑔ℎ𝑡 𝐿𝑒𝑎𝑑𝑒𝑟𝑠ℎ𝑖𝑝 𝑝𝑟𝑜𝑗𝑒𝑐𝑡𝑠. 𝑳𝒐𝒐𝒌𝒊𝒏𝒈 𝒇𝒐𝒓 𝒑𝒂𝒚𝒎𝒆𝒏𝒕 𝒍𝒆𝒂𝒓𝒏𝒊𝒏𝒈 𝒓𝒆𝒔𝒐𝒖𝒓𝒄𝒆? ◼️ Sign up to our unique Payment Assets Library here: https://lnkd.in/dVXjGkzB ◼️Follow Paypr.work [ˈpeɪpəwəːk] for more #paymentinfographics #paymentstrategy #payprwork #paymentinsights

In just the past month, we’ve seen sweeping updates to payment regulations across major economies — from the UK and US to South Africa and Thailand. They’re clear signs that regulators are pushing for faster payments, better fraud controls, more transparency, and stronger digital infrastructure. Here’s a quick overview: UK & EU: User Protection and Real-Time Payments • Termination Rules: From April 2026, PSPs must give 90 days’ notice (up from 60) to end contracts — with clear reasons required. • SEPA Instant Payments: Mandatory by Oct 2025 — includes real-time euro transfers, fee parity, and Verification of Payee to fight APP fraud. 📌 Impact: Greater transparency, faster Euro flows, and fraud prevention built into the rails. United States: Digital-Only Mandate & Cybersecurity Uplift • Federal ePayments: Paper checks are being phased out by Sept 30, 2025. All federal payments will move to digital. • Cybersecurity Standards: PSPs must implement multi-factor authentication and AI-led fraud detection. • The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act of 2025): The first-ever federal legislation to provide a clear regulatory framework for U.S. dollar–pegged payment stablecoins 📌 Impact: Real-time disbursements, operational gains, secure digital rails and a framework for stablecoins. Asia-Pacific: Cross-Border Oversight & Crypto Regulation • Japan: Cross-border PSPs must register under the revised Payment Services Act — improving transparency in online commerce. • Thailand: Draft rules expand fraud controls and formally recognize stablecoins like USDC and USDT for digital issuers. • Mobility Payments: APAC regulators are exploring unified transport wallets for commuters. 📌 Impact: Stronger KYC, smarter fraud defenses, and early-stage crypto mainstreaming. Africa: Banking Overhaul & Mobile Money Regulation • South Africa: From June 1, 2025 — new banking laws require fee transparency, 15-day dispute resolution, biometric checks, and stronger digital ID. • Africa-Wide: Mobile money must be issued by licensed EMIs/banks; PAPSS continues to scale local currency settlements. 📌 Impact: Consumer trust, inclusion, and less USD-dependence in intra-Africa trade. Global: Standards That Are No Longer Optional • MiCA & Crypto Licensing: EU’s MiCA is live; more jurisdictions are tightening VASP rules. • ISO 20022: Now mandatory in many infrastructures — enabling structured data, compliance automation, and end-to-end interoperability. • Open Banking: Expanding across LATAM, MENA, and SSA — driving new API and data-sharing requirements. 📌 Impact: Global standardization is no longer a roadmap item — it’s the route to scale. #payments #iso20022 #stablecoins #regulations #banking #openfinance

Understanding OFAC Screening: A Key Compliance Step in Payments As global financial transactions grow in volume and complexity, ensuring compliance with international sanctions becomes increasingly critical. One of the most vital tools in this compliance framework is OFAC screening. Here’s what you need to know about its importance, implementation, and challenges. What is OFAC Screening? OFAC screening involves cross-checking payment and transactional data against OFAC's Specially Designated Nationals and Blocked Persons List (SDN List) and other sanctions lists. The goal is to prevent funds from being sent to or received from sanctioned entities or individuals. Why is OFAC Screening Essential in Payments? 1. Regulatory Compliance Financial institutions must adhere to U.S. and international sanctions laws to avoid severe penalties, such as hefty fines or operational restrictions. 2. Preventing Financial Crime Screening ensures that financial systems are not used to fund terrorism, drug trafficking, money laundering, or other illicit activities. OFAC Screening in the Payment Lifecycle 1. Pre-Payment Screening When a payment is initiated, the following details are screened: Beneficiary and Sender Details: Names, addresses, and IDs are matched against the SDN and other sanctions lists. Bank Details: Routing, intermediary, and beneficiary banks are checked to ensure none are sanctioned. 2. Transaction Monitoring During Routing For cross-border payments, multiple intermediary banks may process the transaction. Each bank performs its own OFAC screening at different stages of routing. This ensures that any missed matches are identified during subsequent checks. 3. Post-Payment Auditing and Reporting After a payment is processed, institutions maintain detailed logs of all transactions, including: False positives (legitimate transactions mistakenly flagged). Blocked payments. Confirmed matches are reported to OFAC or the relevant regulatory authority as part of compliance protocols. Challenges in OFAC Screening 1. High Volume of Transactions With millions of payments processed daily, screening every transaction without affecting processing speed is a significant operational challenge. 2. False Positives Common names, misspellings, or minor mismatches often trigger false positives. These require manual review, delaying legitimate transactions. Conclusion OFAC screening is not just a regulatory obligation; it is a critical tool for safeguarding the global financial system. By ensuring compliance, preventing financial crimes, and maintaining trust, financial institutions contribute to a safer and more transparent financial ecosystem. While challenges like high transaction volumes and false positives persist, leveraging innovative technologies and robust processes can streamline the screening process and enhance compliance standards. #AML #AMLCFT #AMLCompliance #Risk #Audit #AntiFinancialCrime #MoneyLaundering #FinancialCrimeCompliance

Hot of the press 🔥 Starting 30 December 2025 📅, the EBA’s new guidelines (EBA/GL/2024/15) set out a clear mandate for CASPs and PSPs to ensure the effective implementation of Union and national restrictive measures when performing transfers of funds and crypto-assets, as defined in Regulation (EU) 2023/1113 of the European Parliament and Council. 🛡️💼 These guidelines apply to: • Competent authorities responsible for supervising PSPs and CASPs under Regulation (EU) 2023/1113 🏛️ • Financial institutions (Article 4, Regulation (EU) No 1093/2010), including PSPs (Article 3, point (5)) and CASPs (Article 3, point (15)). Under these rules, CASPs and PSPs must screen all transfers—whether ongoing relationships or one-off transactions—before assets or funds are accessible to beneficiaries. 🕵️♂️🔍 This includes verifying payer and payee identities, reviewing transaction purposes, and even checking wallet addresses when available. 💳🔗 Institutions must also assess the reliability of their restrictive measures processes, especially when partnering with other PSPs and CASPs, to prevent regulatory breaches. 🔒✅ Accountability ultimately rests with CASPs and PSPs, even if certain compliance functions are outsourced. This approach strengthens not only compliance but also builds a secure financial and crypto ecosystem in line with EU values. 🇪🇺🌍 Source from EBA 👉 https://lnkd.in/eiumDbCK #TravelRule #TFR

🤔lex generalis vs lex specialis 🤔 💰(03 March) Bank for International Settlements – BIS From cash to crypto: towards a consistent regulatory approach to illicit payments by Andrea Minto and Anneke Kosse, Takashi Shirakami and Peter Wierts 📌 Payment instruments vary in design, giving rise to different ML/TF risk profiles, with a fundamental distinction between instruments that involve intermediaries subject to #AML / #CFT requirements (eg #CDD, transaction monitoring and suspicious transaction reporting) and those that do not (eg #cash, offline #CBDC, self-hosted #cryptoasset wallets). 📌 A consistent regulatory approach is required, combining lex generalis (a coherent baseline across categories) with lex specialis (instrument-specific provisions), in line with proportionality. If not well calibrated, differences in requirements may give rise to arbitrage and a waterbed effect, weakening the effectiveness of regulatory frameworks. 📌 Uniform AML/CFT regulatory requirements should apply across all payment instruments involving individually identifiable intermediaries, including commercial banks, e-money institutions, #PSPs that intermediate online CBDC and wallet service providers, together with harmonised privacy and data protection requirements to address the privacy-integrity tradeoff consistently. 📌 For instruments without intermediaries, AML/CFT frameworks can leverage touch points at entry/exit points where illicit funds interact with regulated intermediaries, while recognising that this is only a partial solution limited to monitoring incoming and outgoing transactions. 📌 Additional tools include imposing transaction limits (with varying enforceability across instruments), programming limits into offline CBDC or DLT protocols, strengthening the responsibilities of issuers, and increasing the costs associated with non-compliance for private-sector actors engaged in professional activities. 📌 AML/CFT requirements may intersect with other policy objectives, including the legal tender status of central bank-issued instruments and transaction limits introduced for financial stability purposes (eg to mitigate risks of disintermediation or digital bank runs), which may differ from those set for AML/CFT purposes. 📌 A forward-looking AML/CFT framework incorporating overarching high-level definitions of regulated entities and activities would facilitate the inclusion of innovative payment instruments by default, help hinder regulatory arbitrage, and reduce reactive, piecemeal adjustments to the regulatory framework while supporting better outcomes for end users. https://lnkd.in/ezd8kh3P

I've been in payments compliance for years, and I'm seeing a pattern that most businesses are missing. Everyone's excited about programmable payments and smart contracts, but they're not thinking enough about the compliance side that's coming. From my experience dealing with regulators, I know they always catch up to the tech. We've seen this with every fintech innovation—mobile payments, digital wallets, crypto (slowly). First, it's the wild west, then regulators start asking questions, and then requirements get formalized. Most businesses I talk to are building custom payment logic with smart contracts because they're instant and programmable. Makes total sense, but they're not considering that someone might need to verify this code later. That creates problems down the road when you need to prove your code does what you say it does. I don't know exactly what smart contract compliance will look like—could be formal audits, could be certification processes, could be something else entirely. But I do know that when you're moving money through code, regulators eventually want to understand that code. Whether it's audits or some other verification process, having clean, documented, predictable contract architecture is going to matter. At Coinflow Labs, we've always stayed ahead of regulatory curves rather than reacting to them. We learned from the early crypto payment days that compliance-first thinking saves you headaches later. Better to be six months early than scrambling when the requirements drop.

Ok, so the UK Home Office and HM Treasury published the UK's 2025 National Risk Assessment (NRA) for Money Laundering and Terrorist Financing yesterday. There are a few key points that our clients should be aware of, particularly those operating in the electronic money and payments sector. 📜 Financial Crime risk assessments: the Financial Conduct Authority expects firms it regulates or supervises to pay attention to the NRA when creating and maintaining business-wide and customer-specific financial crime risk assessments. Refer to the FCA's Financial Crime Guide (also recently updated) at paragraph 3.2.3. Accordingly, if you're an MLRO or on the board of a regulated or supervised firm, this might be a good time to do this / check that this has been done. 💷 Typologies: the NRA includes an updated assessment of typologies that have been sighted in each sector. Many are old, but there are a few new entrants. Ensure that your risk assessments account for these. Furthermore, determine whether your monitoring systems (manual or technological) sufficiently consider these typologies and whether calibrations remain adequate. 🎯 Prepare for possible regulatory interaction, especially if your firm is in the payments or electronic money space: the NRA reports a 231% increase in money laundering-related FCA supervisory activity involving these firms between 2020-24. Could your firm be next? Are you confident that your firm could demonstrate a robust control environment if inspected by the regulator? 🏦 The intersection between payment/electronic money services and cryptoasset activities is a key area of focus for UK authorities. The issuance of virtual IBANs is also attracting considerable scrutiny. If your firm is involved in these activities, it is likely to be very high on the radar for interaction. If you are seeking to launch a new firm or business line(s) in these areas, expect this to receive a lot of attention during the application process. These are just a few bits that I believe to be significant. If you'd like to read the full report, see here 👇 https://lnkd.in/eh8V4dfw #compliance #aml #amlcompliance #financialservices #financialmarkets #cryptoassets #payments