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IAMTN to lobby the European Parliament and The Treasury On the proposed European Payment Services Directive


Says IAMTN CEO Lady Olga Maitland:

“The proposals will hit every bank, every money transfer operator sending money from Europe to all over the world .
“They are in danger of driving money transfer operators out of business due to burdensome red tape. We must not suffocate the very businesses we want to encourage . Further in the end the customer suffers with increased charges and thus less money to ‘send home.’

“ We are up against a tight deadline and will put our concerns to the European Parliament and the Treasury within the next month.”

Earthport’s Commercial Director Nick Dunlop said,”These proposals will drive the small money transfer operator away just at a time when we need to do all we can to legitimise their businesses.”

Chairman of the UK Money Transmitters Association Dominic Thorncroft said.”The requirements are going to be too much for many, and hugely costly for everybody. I should point out that not all customers are money launderers. The vast majority are honest.”

David Coates, British Bankers Association:”We have to be aware that terrorist transactions and financial crime affects us all. The task if to ensure we get the right structures for monitoring information and transactions. “

Nicholas Louis, General Manager Baltic International Bank said,”Like all banks, big and small, we are seriously concerned by the proposals. I do not think the European Commission have thought through just what is involved in terms of added bureauracy. The cost will be incalculable.”

IAMTN held a seminar chaired by Lord Lamont of Lerwick and sponsored by Earthport plc the electronic payments provider, focussing on the proposed EU Payments Services Directive and regulation which will hit every bank and every money transfer operator in their business.

The conclusion of the seminar was that IAMTN will lobby the Treasury, and the European Parliament in protest at the onerous red tape being inflicted by the EU in the proposed Payment Services Directive.

Says CEO Lady Olga Maitland,”We have been made aware by our members in the banking and money transfer operators sectors of their very deep concerns on this.

“While accepting that the EU want to rationalise payments, and at the same time take a stronger stand in facing down money laundering, it has now become apparent they are taking a sledge hammer to hit a nut. The approach has had the opposite effect to what they intended.

“Banks are now protesting because of the undue red tape being inflicted on them which will require time and extra staff to deal with; let alone some of the requirements which do not make for sensible banking.

“Money transfer operators feel they are being victimised for the massive financial crime, even though their own individual transactions are on average no more than £500. They will be so seriously affected if the proposals go through as suggested, that many money transfer operators will be either driven out of business altogether or will be forced to enter the informal sector which means no professional protection for either them or the customer.”

The key points of concern are:

1. Much more customer data will have to be collected which takes time and therefore costs money. This will include collecting and verifying the name and address (or date, place of birth or a national identity number) for a sending customer. The ID issue will be the most difficult to provide for the small remittance home sender. Many do not have passports or ID cards.
2. Verify source of every transaction above EUR1,000 (and where suspicious, for any transaction below EUR1,000)
3. Other requirements include assigning the sending customer a payment ID number. All information on the sending customer must be properly verified.
4. Send (at least) customer /payment ID number to payout service provider (other information to be available on request by law enforcement within 3 days)
5. Keep all records of information and verification for 5 years.
6. For transfers outside the EU, send complete customer information with the transfer for every transfer so that it is available to payout service provider in recipient country.
7. Concern that the customer data will have to be transmitted to non-EU customers with serious data security issues places customer confidentiality at risk. The information could be abused by governments or commercial interests.
8. There are technical issues such as what customer information will money transfer operators be obliged to provide to the intermediary banks processing ‘batched transactions’.
9. Doubts remain how non-Financial Action Task Force countries will use the information they receive.

In addition banks have the following concerns:
1. No clarity on the definition of the exact moment a transaction is agreed upon.
2. Electronic banking transactions will need a check that the employee of a corporate sending money is duly authorised. This will take up costly time.
3. Any fraudulent payment will be the responsibility of the bank /money transfer operator to refund the corporate or individual.
4. Unfair refund mechanism: eg. The money transfer operator/bank could be held liable for disputed overpayments. Where a customer has been billed EUR 500 for a hotel room but charged EUR600, under the EU proposed directive the payment service provider would have to refund the full EUR600 rather than the EUR100 in dispute.
5. Processing requirements entailing detailed information about the transaction could become unduly onerous. Compliance costs could shoot up as a result.
6. Unreasonable execution times demanding that all payments be made by the end of the working day following the order. Ideal in principal but does not take into account national holidays and different working weeks across the world . The consequent costs would be disproportionate to the transaction itself.
7. The scope of the EU directive is far too broad applying to non-EU currencies. The rules covering cash from an ATM are unreasonable requiring excessive account information to be given to the payee.
8. Banks and money transfer operators must have the right to use their own risk-based assessments on customers; credit ratings and settlement risk considerations should be taken into account. Without this public confidence cannot be maintained.


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