FATF Recommendation 16, payment transparency, by paragraph: what it asks of a monitoring programme

Where a country adopts a de minimis threshold for cross-border transfers other than cash withdrawals, set no higher than USD or EUR 1,000, transfers below it carry the names of originator and beneficiary and the account number of each where an account is used (or a unique transaction reference number that permits tracing), and where the funds come from another institution its name and the account number; the information need not be verified unless money laundering or terrorist financing is suspected, in which case the institution verifies its own customer's information.

Cross-border transfers above the applicable threshold always carry the names of originator and beneficiary; their account numbers where used, or a unique transaction reference number, with the funding institution's name and account where funds are drawn elsewhere; the originator's address (country and town suffice where no standardised postal address exists) and the beneficiary's country and town or nearest alternative; the originator's date of birth where a natural person (year of birth where the full date is unavailable); and, for a legal person originator or beneficiary, the connected BIC, the Legal Entity Identifier or the unique official identifier where one exists.

For transfers flowing from a purchase of goods or services with a credit, debit or prepaid card, the card number accompanies all transfers flowing from the transaction and the name and location of the card-issuing and merchant-acquiring institutions are made available on request, in a timely manner, to the other institutions in the chain and through them to competent authorities, so that everyone can identify which institutions hold the full cardholder and merchant information and in which countries.

Where a credit, debit or prepaid card effects another type of payment or value transfer, such as a person-to-person transfer, the transaction is subject to the applicable domestic or cross-border requirements.

For a cross-border cash withdrawal with a credit, debit or prepaid card through a different institution (not an ATM operated by the institution that holds the account, where the information is otherwise available under Recommendation 18), the card number accompanies the withdrawal and the cardholder's name is sent to the acquiring institution on request within three business days.

The ordering institution ensures that cross-border transfers above the de minimis threshold contain required and accurate originator information (verified for accuracy) and required beneficiary information.

An intermediary institution takes reasonable measures, consistent with straight-through processing, to identify cross-border transfers that lack required originator or beneficiary information.

A beneficiary institution takes reasonable measures, which may include post-event monitoring or real-time monitoring where feasible, to identify cross-border transfers that lack required originator or beneficiary information.

For cross-border transfers above the de minimis threshold the beneficiary institution verifies the beneficiary's identity, if not previously verified, and keeps the information in accordance with Recommendation 11.

For cross-border transfers above the threshold the information received on the intended beneficiary informs the beneficiary institution's monitoring, aimed at detecting misdirected payments from possible laundering, fraud or error, and it mitigates the risk of transfers reaching an unintended beneficiary through at least one of: a per-transaction check of the extent to which the beneficiary name and account number in the message align with its own records (alignment need not be an exact match and may vary with risk and context); holistic ongoing risk-based monitoring for anomalous accounts, transactions and activity including misaligned beneficiary information; or, where both institutions participate in a pre-validation mechanism such as confirmation or verification of payee, that pre-validation in place of the other two.

A beneficiary institution has effective risk-based policies and procedures for deciding when to execute, reject or suspend a transfer that lacks required originator or beneficiary information or that its alignment checks identify as potentially misdirected, and what follow-up action to take.

Financial institutions monitor payments or value transfers to detect those lacking required originator or beneficiary information and take appropriate measures, which the Interpretive Note specifies for intermediary and beneficiary institutions as reasonable detection measures and risk-based execute, reject or suspend decisions.

In processing payments or value transfers, financial institutions take freezing action and do not conduct transactions with persons and entities designated under the UN Security Council resolutions on terrorism and terrorist financing (resolution 1267 and its successors and resolution 1373) and on the financing of proliferation of weapons of mass destruction; the Recommendation does not prescribe whether or how message information is screened against sanction lists, since different mechanisms can achieve compliance with targeted financial sanctions.