Source: OJ L 150, 9.6.2023, pp. 1–39

Article 2 Scope

Summary What does Article 2 of the Transfer of funds regulation (TFR) say?

This is the scope article, which defines the boundaries of the regulation — who it catches and, crucially, who it does not.

It establishes that the regulation covers payment service providers and crypto-asset service providers established in the Union, including those operating as intermediaries and those running crypto-ATMs.

The bulk of the article is dedicated to carving out exclusions, listing the specific types of transfers, persons, and scenarios that fall outside the regulation's reach.

There is also a limited opt-out available to Member States for certain low-value domestic transfers.

Article 2 directly supports Article 1, which sets out the regulation's purpose, by translating that purpose into a defined universe of in-scope and out-of-scope activity.

Important points:

Ensure your services fall within scope — the regulation applies to payment service providers and crypto-asset service providers established in the Union, including intermediaries and crypto-ATM operators.
A wide range of transfers are excluded from scope, including cash withdrawals, payments to public authorities for taxes or fines, cheque image exchanges, transfers where both parties are payment service providers acting on their own behalf, and person-to-person crypto-asset transfers with no service provider involved.
Member States are permitted to opt out of applying the regulation to domestic transfers not exceeding EUR 1 000 made to a payee's account used exclusively for goods or services, provided specific traceability and regulatory conditions are met.

Springlex's summary of the article, a reading aid, not a substitute for the legal text.

1. This Regulation shall apply to transfers of funds, in any currency, which are sent or received by a payment service provider or an intermediary payment service provider established in the Union. It shall also apply to transfers of crypto-assets, including transfers of crypto-assets executed by means of crypto-ATMs, where the crypto-asset service provider, or the intermediary crypto-asset service provider, of either the originator or the beneficiary has its registered office in the Union.
1. This Regulation shall not apply to the services listed in Article 3, points (a) to (m) and point (o), of Directive (EU) 2015/2366.
1. This Regulation shall not apply to transfers of funds or to transfers of electronic money tokens, as defined in Article 3(1), point (7), of Regulation (EU) 2023/1114, carried out using a payment card, an electronic money instrument, a mobile phone or any other digital or IT prepaid or postpaid device with similar characteristics, provided that the following conditions are met:
  1. that card, instrument or device is used exclusively to pay for goods or services; and
  2. the number of that card, instrument or device accompanies all transfers flowing from the transaction.
2. However, this Regulation shall apply when a payment card, an electronic money instrument, a mobile phone or any other digital or IT prepaid or postpaid device with similar characteristics is used in order to effect a transfer of funds or electronic money tokens between natural persons acting as consumers for purposes other than trade, business or professional activity.
1. This Regulation shall not apply to persons that have no activity other than to convert paper documents into electronic data and that do so pursuant to a contract with a payment service provider, or to persons that have no activity other than to provide payment service providers with messaging or other support systems for transmitting funds or with clearing and settlement systems.
2. This Regulation shall not apply to a transfer of funds where any of the following conditions is met:
  1. it involves the payer withdrawing cash from the payer’s own payment account;
  2. it constitutes a transfer of funds to a public authority as payment for taxes, fines or other levies within a Member State;
  3. both the payer and the payee are payment service providers acting on their own behalf;
  4. it is carried out through cheque images exchanges, including truncated cheques.
3. This Regulation shall not apply to a transfer of crypto-assets where any of the following conditions is met:
  1. both the originator and the beneficiary are crypto-asset service providers acting on their own behalf;
  2. the transfer constitutes a person-to-person transfer of crypto-assets carried out without the involvement of a crypto-asset service provider.
4. Electronic money tokens, as defined in Article 3(1), point (7), of Regulation (EU) 2023/1114, shall be treated as crypto-assets under this Regulation.
1. A Member State may decide not to apply this Regulation to transfers of funds within its territory to a payee’s payment account permitting payment exclusively for the provision of goods or services where all of the following conditions are met:
  1. the payment service provider of the payee is subject to Directive (EU) 2015/849;
  2. the payment service provider of the payee is able to trace back, through the payee, by means of a unique transaction identifier, the transfer of funds from the person who has an agreement with the payee for the provision of goods or services;
  3. the amount of the transfer of funds does not exceed EUR 1 000.

Relevant recitals

Recital 3 Scope extended to cover transfers of virtual assets

Given that Regulation (EU) 2015/847 currently only applies to transfers of funds, that is to banknotes and coins, scriptural money, and electronic money as defined in Article 2, point 2, of Directive 2009/110/EC of the European Parliament and of the Council(⁶), it is appropriate to extend the scope of Regulation (EU) 2015/847 in order to also cover transfers of virtual assets.

Recital 20 Exclusion of paper-to-electronic converters and messaging system providers

Persons that merely convert paper documents into electronic data and are acting under a contract with a payment service provider, and persons that provide payment service providers solely with messaging or other support systems for transmitting funds or with clearing and settlement systems should not fall within the scope of this Regulation.

Recital 21 Exclusion of ancillary infrastructure providers for crypto-asset transfers

Persons that provide only ancillary infrastructure, such as internet network and infrastructure service providers, cloud service providers or software developers, that enables another entity to provide transfer services for crypto-assets, should not fall within the scope of this Regulation unless they perform transfers of crypto-assets.

Recital 22 Exclusion of person-to-person crypto-asset transfers without service providers

This Regulation should not apply to person-to-person transfers of crypto-assets conducted without the involvement of a crypto-asset service provider, or to cases where both the originator and the beneficiary are providers of transfer services for crypto-assets acting on their own behalf.

Recital 23 Exclusion of low-risk payment services and specific transaction types

Transfers of funds corresponding to services referred to in Article 3, points (a) to (m) and point (o), of Directive (EU) 2015/2366 of the European Parliament and of the Council(¹⁸) do not fall within the scope of this Regulation. It is also appropriate to exclude from the scope of this Regulation transfers of funds and of electronic money tokens, as defined in Article 3(1), point (7), of Regulation (EU) 2023/1114, that represent a low risk of money laundering or terrorist financing. Such exclusions should cover payment cards, electronic money instruments, mobile phones or other digital or information technology (IT) prepaid or postpaid devices with similar characteristics, where they are used exclusively for the purchase of goods or services and the number of the card, instrument or device accompanies all transfers. However, the use of a payment card, an electronic money instrument, a mobile phone or any other digital or IT prepaid or postpaid device with similar characteristics in order to effect a transfer of funds or of electronic money tokens between natural persons acting as consumers for purposes other than trade, business or professional activity, falls within the scope of this Regulation. In addition, automated teller machine withdrawals, payments of taxes, fines or other levies, transfers of funds carried out through cheque images exchanges, including truncated cheques, or bills of exchange, and transfers of funds where both the payer and the payee are payment service providers acting on their own behalf should be excluded from the scope of this Regulation.

Recital 24 Non-fungible crypto-assets outside scope unless classified as funds

Crypto-assets that are unique and not fungible are not subject to the requirements of this Regulation unless they are classified as crypto-assets or funds under Regulation (EU) 2023/1114.

Recital 25 Crypto-ATMs as high-risk vehicles for anonymous illicit transfers

Crypto-asset automated teller machines (the ‘crypto-ATMs’) can enable users to perform transfers of crypto-assets to a crypto-asset address by depositing cash, often without any form of customer identification and verification. Crypto-ATMs are particularly exposed to money laundering and terrorist financing risks because the anonymity they provide, and the possibility of operating with cash of unknown origin, make them an ideal vehicle for illicit activities. Given the role of crypto-ATMs in providing or actively facilitating transfers of crypto-assets, transfers of crypto-assets linked to crypto-ATMs should fall under the scope of this Regulation.

Recital 26 Member State option to exempt domestic low-value fund transfers

In order to reflect the special characteristics of national payment systems, and provided that it is always possible to trace the transfer of funds back to the payer, Member States should be able to exempt from the scope of this Regulation certain domestic low-value transfers of funds, including electronic giro payments, used for the purchase of goods or services.

Recital 27 No domestic exemption for low-value crypto-asset transfers

Due to the inherent borderless nature and global reach of transfers of crypto-assets and of the provision of crypto-asset services, there are no objective reasons to distinguish the treatment of money laundering and terrorist financing risks of national transfers from that of cross-border transfers. In order to reflect those specific features, no exemption from the scope of this Regulation should be granted to domestic low-value transfers of crypto-assets, in line with the FATF requirement to treat all transfers of crypto-assets as cross-border.

Table of contents

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