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HMRC internal manual

Money Laundering Regulations: Compliance

HM Revenue & Customs
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Business sector specific Guidance: Money Service Businesses: Payment Regulation checks at a Money Transmitters

The Payments Regulation and Transfer of Funds Regulations are comparatively new legislation which only applies to Money Transmitters. They came into effect on 1 January 2007.

This legislation obliges Money Transmitters to obtain and transmit complete information on the payer at a threshold of €1,000 , which is much lower than the €15,000 threshold for basic mandatory customer due diligence checks under the Money Laundering Regulations 2007.

When carrying out checks on money transmitters, compliance officers will be testing the business’ compliance with the Payment Regulations and will offer the same help or where necessary consider the same range of warnings, penalties and sanctions that are available to them for non-compliance with the Money Laundering Regulations.

These checks will, where it is appropriate, include checks on small businesses who only deal with small transactions below the €15,000 threshold.

Full details of the requirements of the Payments Regulation and the interaction with the requirements of the Money Laundering Regulations can be found in the Anti Money Laundering Guidance for Money Service Businesses. A summary of the main requirements is set out below.

* The requirements came into effect on 1 January 2007 
* Money transmitters, who are referred to as Payment Service Providers (PSPs) in the regulations are required to obtain customer information when undertaking an order for the transfer of a customer’s (payer’s) funds.
* The information required is the payer’s name address and account number (referred to in the regulations as the complete payer’s information).
* For one off transactions where the customer does not have an account businesses must give the transaction a unique identifying number.
* If the transfer of funds is for an amount of €1,000 or more the PSP must verify the customer information from a reliable independent source.
* As an alternative to giving the customer’s address, businesses can substitute their date and place of birth and their customer identification number or national identity number.
* The PSP must verify the customer information for transactions below €1,000 where they suspect money laundering.
* Verification is required when there are linked transactions which exceed €1,000 .

To test that these requirements are being followed the following tests should be carried out.

* Is each transaction given a unique reference number?
* Is Complete Information on the Payer (CIP) recorded, no nick-names but actual names as appear on official documents.
* Can the business demonstrate that CIP has been sent for example are copies of faxes or emails sent to the PSP of the payee or to an IPSP kept?
* Is ID taken from the customer up to date? If there is no business relationship in place the ID must be current to verify CIP.