European Commission Publishes Report on Implementation of Wire Transfer Regulation

The European Commission has published a report detailing: (i) the extent to which Member States have implemented the sanctions and monitoring sections of the EU Wire Transfer Regulation; and (ii) the particular sanctioning activities that national regulators have adopted under the Regulation. The Commission was obliged to provide the report to the European Parliament and Council of the European Union under the Wire Transfer Regulation. Although Member States are not obliged to take specific steps in response to the report's findings, the Commission concludes the report by stating its intention to continue to support Member States in their implementation of the Wire Transfer Regulation and reserves the right to take further measures to ensure the Regulation is correctly implemented by all Member States.
 
The Wire Transfer Regulation imposes obligations upon those providing fund transfer services (i.e. payment systems services). These include requirements for service providers to: (i) obtain information on those making and receiving payments; (ii) verify the accuracy of information provided; and (iii) report suspicious transactions in accordance with the Money Laundering Directive. The Wire Transfer Regulation sits alongside the Money Laundering Directive in providing a regulatory framework for the EU's broader anti-money laundering and counter-terrorist financing objectives. A revised version of the Regulation was implemented and has applied directly in Member States since June 26, 2017, meaning that Member States are automatically subject to its provisions without the need for national implementing legislation. Nevertheless, individual Member States are responsible for enforcement of sanctions and monitoring of those subject to the Regulation. 
 
In its report, the Commission acknowledges that the measures taken by Member States to establish and impose appropriate sanctions in accordance with the Regulation have broadly been satisfactory. Certain shortcomings are identified, however, including:
 

1. Failures to ensure sanctions under the Regulation are consistent with the Money Laundering Directive;
2. Failures by national regulators to cooperate with other Member States in their enforcement activities and coordinate their actions;
3. Inadequate sanctions imposed for breaches listed under the Money Laundering Directive that should also apply under the Wire Transfer Regulation;
4. Failures to establish effective mechanisms for reporting of breaches by in-scope firms to national regulators;
5. Unsatisfactory implementation of the sanctions against legal persons regime;
6. Partial implementation of the regime, imposing sanctions only upon repeated, systematic or serious breaches; and
7. Inadequate safeguards for internal reporting of breaches of the Regulation within payment services providers.

 
The report also provides an overview of the extent to which relevant national regulators have imposed sanctions. Nineteen out of the 26 Member States that responded to the Commission's questionnaire had not imposed sanctions for breaches of the Regulation since it became applicable. Member States reported that they would inform another Member State if they discovered a breach that applied to that relevant Member State. However, no national regulator has, as yet, been presented with such a situation and no Member State reported having received a request for coordination from another Member State.
 
View the report.
 
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