2023年JFC_BALANI,ENG.doc

JFC_Balani,ENG What faster payments means for anti-money laundering compliance Henry Balani Received (in revised form) 26th June, 2023 Accuity, 1007 Church Street, Evanston, IL 60201, USA Tel: +1 847 933 8160; E-mail: Henry.Balani@accuity Journal of Financial Compliance Vol. 1, No. 3 2023, pp. 245–254 © Henry Stewart Publications, 2398-8053 Henry Balani is Global Head of Strategic Affairs for Accuity, responsible for driving thought leadership. In his prior role as Head of Innovation, he helped pioneer new anti-money laundering (AML) sanction screening solutions related to trade compliance. As Managing Director, Dr Balani managed Accuity’s Compliance Group that includes product management and professional services. Accuity is a global provider of payments and compliance solutions in the financial services and corporate sectors. Prior to joining Accuity, Dr Balani managed consulting practices with some of the largest professional services organisations in the world, including Accenture and IBM. Dr Balani’s previous role was at Pegasystems as their Consulting Director in their financial services practice. At IBM, he was Director of Client Services in the Software Group, where he successfully managed Lotus’ delivery capability in web application development. He was also Consulting Manager at Andersen Consulting, now Accenture. Dr Balani received his doctorate of business administration from the University of Wisconsin, conducting research on the impact of regulations on banking valuations and risk. He also holds an MBA from Northern Illinois University and BS in economics, international trade and development from the London School of Economics. He teaches graduate-level classes in international economics and global business. Dr Balani is frequently quoted in major financial publications including the Wall Street Journal and Bloomberg. He regularly speaks at various conferences on topics related to compliance and payments efficiency, and was recently invited to speak at the UN Financing for Development Forum on correspondent banking trends. Abstract The global phenomenon of faster payments is having an impact on operational issues related to anti-money laundering (AML) compliance. Faster payments are a response to the need to modernise current payment settlement networks as a result of market, technology and demographic trends. Faster payment networks provide benefits to the three major participant groups: corporations, consumers and financial institutions. AML compliance operations have traditionally been designed to operate in a batch mode, holding and reviewing potential suspicious transactions in a queue prior to release. The pressure to release transactions in a faster payments environment is significantly higher, potentially affecting customer service level agreements and the need to comply with established AML review procedures. There are opportunities to improve AML compliance procedures by re-examining processes used, staffing approaches and optimising technology tools. Keywords: faster payments, real time payments, compliance, anti-money laundering, terrorist financing DEVELOPMENT OF FASTER PAYMENT NETWORKS WORLDWIDE Definitions Faster payment networks have gained traction globally, driven by the inherent demand from businesses and consumers looking for real-time ability to make payments and settle between the originator and beneficiary. To date, there is no universal definition of faster payments, also being referred to as real-time payments, instant payments, immediate payments and the like.1 In the USA, National Automated Clearing House Association’s (NACHA) Payments Innovation Alliance defines ‘a real-time payment as an immediate, irrevocable, interbank account-to-account transfer that utilises a real-time messaging system connected to every end user through a financial institution, third party or another real-time system’.2 The definition goes on to include: ‘Funds are available for use by the receiver and real-time confirmation is provided to both the sender and receiver in seconds.’3 The Bank for International Settlements Committed on Payments and Market Infrastructures defines faster payments as ‘a payment in which the transmission of the payment message and the availability of “final〞 funds to the payee occur in real time or near real time on as near to a 24 hour, seven day basis as possible’.4 For the purposes of this paper, faster payments are meant to include all versions of more frequent and real-time payment schemes. Examples from around the world Various iterations of faster payment schemes have been deployed around the world. In Europe, the Euro Banking Association (EBA) has developed a payments infrastructure platform that allows for instant payments and settlement across the Single European Payments Area (SEPA), scheduled to go live in November 2023.5 The platform is available to payment service providers in the European Union to develop various payment se