Payment service providers connect merchants to the broader financial system so they can accept credit and debit card payments from customers. Payment service providers connect merchants, consumers, card brand networks and financial institutions.

Whilst Payment Services are not specifically covered by the AML/CTF regime, some of the processes are services designated by the AML/CTF Act and Rules and therefore recognised as being vulnerable to use and abuse by criminals.

Like other financial services and products, payment service providers can be abused for ML/TF purposes.

• Funds used with payment service providers can be prepaid. This absence of credit risk means that service providers may not obtain full and accurate information about the customer and the nature of the business relationship.
• Transactions can be carried out and funds withdrawn or converted much faster than through more traditional channels.
• Many payment service providers’ business model relies on non-face to face business relationships and transactions, which present ML/TF risks due to increased impersonation fraud risk and the chance that customers may not be who they say they are.

Payment service providers captured by the AML/CTF obligations must ensure the organisation conducts a comprehensive ML/TF risk assessment to identify, assess, mitigate and manage ML/TF risk exposures. This is a critical first step in complying with the AML/CTF Act and Rules.

Payment service providers captured by the AML/CTF obligations are those that provide services designated by the AML/CTF Act, including:

• Providing an account
• Permitting transactions on an account
• Accepting electronic funds transfer instructions to remit funds

However, a significant proportion of the process undertaken by payment services providers is not currently a designated service under the AML/CTF Act.

The AML/CTF regime is risk-based, which means that your responses to the AML/CTF obligations placed upon you should be risk-based. 

A risk-based AML/CTF regime requires that you understand and address the Money Laundering and Terrorism Financing (ML/TF) risks associated with the payment services you offer.

You must then design, implement and maintain systems, procedures and controls that are proportionate to your ML/TF risks.

Initialism are the AML/CTF experts, so you don’t have to be.

With over 50 years of expert knowledge and real world experience our AML/CTF compliance services solutions will help you to navigate your legal and regulatory requirements so that your business complies with its AML/CTF obligations in the fastest and most cost-effective way.

Initialism provides a range of AML/CTF services and solutions to support your business in becoming AML/CTF compliant and maintaining compliance.

Our services and solutions allow you to tailor support based on your capacity, experience and budget.