Art. 35 Agreements with countries and territories which do not form part of the territory of the Union | Transfer of funds regulation (TFR) | AML

This article establishes a mechanism by which a Member State can seek Commission approval to treat transfers of funds with a closely linked third country or territory as if they were domestic transfers, effectively granting a derogation from the standard cross-border rules of the Regulation.

It is a procedural article that sets out both the qualifying conditions for such an arrangement and the step-by-step process the Commission follows to assess and decide on a Member State's request.

Important points:

The Commission is the authorising body, and approval is only possible if the third country shares a monetary union or currency area with the Member State, its payment service providers participate in that Member State's payment systems, and it applies equivalent rules to those in this Regulation.
Member States wishing to pursue such an agreement must submit a formal request to the Commission with all necessary supporting information.
Once a request is received, the relevant transfers are provisionally treated as domestic transfers until the Commission reaches a final decision, which must be issued within 18 months of receiving the request.

1. The Commission may authorise any Member State to conclude an agreement with a third country or with a territory outside the territorial scope of the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU) as referred to in Article 355 TFEU (the ‘country or territory concerned’), which contains derogations from this Regulation, in order to allow transfers of funds between that country or territory and the Member State concerned to be treated as transfers of funds within that Member State.
2. Such agreements may be authorised only where all of the following conditions are met:
  1. the country or territory concerned shares a monetary union with the Member State concerned, forms part of the currency area of that Member State or has signed a monetary convention with the Union represented by a Member State;
  2. payment service providers in the country or territory concerned participate directly or indirectly in payment and settlement systems in that Member State;
  3. the country or territory concerned requires payment service providers under its jurisdiction to apply the same rules as those established under this Regulation.
1. A Member State wishing to conclude an agreement as referred to in paragraph 1 shall submit a request to the Commission and provide it with all the information necessary for the appraisal of the request.
1. Upon receipt by the Commission of such a request, transfers of funds between that Member State and the country or territory concerned shall be provisionally treated as transfers of funds within that Member State until a decision is reached in accordance with this Article.
1. If, within two months of receipt of the request, the Commission considers that it does not have all the information necessary for the appraisal of the request, it shall contact the Member State concerned and specify the additional information required.
1. Within one month of receipt of all the information that it considers to be necessary for the appraisal of the request, the Commission shall notify the requesting Member State accordingly and shall transmit copies of the request to the other Member States.
1. Within three months of the notification referred to in paragraph 5 of this Article, the Commission shall decide by means of an implementing act in accordance with Article 34(2) whether to authorise the Member State concerned to conclude the agreement that is the subject of the request.
2. The Commission shall, in any event, adopt a decision as referred to in the first subparagraph of this paragraph within 18 months of receipt of the request.

Article 35 Agreements with countries and territories which do not form part of the territory of the Union

Relevant recitals