Source: OJ L 150, 9.6.2023, pp. 1–39

Article 7 Detection of missing information on the payer or the payee

Summary What does Article 7 of the Transfer of funds regulation (TFR) say?

This article places a set of detection and verification obligations squarely on the payment service provider of the payee — that is, the receiving side of a transfer of funds.

It acts as the counterpart to the obligations placed on the payer's payment service provider in Articles 4, 5, and 6, ensuring that the receiving end of the payment chain is equally responsible for checking that the required information on both payer and payee is present and correctly formatted.

The article distinguishes between transfers where the payer's provider is inside or outside the Union, and introduces a EUR 1,000 threshold that determines whether full verification of payee information is required before funds are made available.

Important points:

Implement effective procedures to detect whether payer and payee information fields are correctly filled in and whether required information is missing, with the scope of what counts as "required" varying depending on whether the payer's provider is established inside or outside the Union.
For transfers exceeding EUR 1,000, verify the accuracy of payee information from a reliable and independent source before crediting the payee's account or making funds available.
Verification obligations for transfers under EUR 1,000 are triggered only if the pay-out is in cash or anonymous electronic money, or if there are reasonable grounds for suspecting money laundering or terrorist financing.

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

1. The payment service provider of the payee shall implement effective procedures to detect whether the fields relating to the information on the payer and the payee in the messaging or payment and settlement system used to effect the transfer of funds have been filled in using characters or inputs admissible in accordance with the conventions of that system.
1. The payment service provider of the payee shall implement effective procedures, including, where appropriate, monitoring after or during the transfers, in order to detect whether the following information on the payer or the payee is missing:
  1. for transfers of funds where the payment service provider of the payer is established in the Union, the information referred to in Article 5;
  2. for transfers of funds where the payment service provider of the payer is established outside the Union, the information referred to in Article 4(1), points (a), (b) and (c), and Article 4(2), points (a) and (b);
  3. for batch file transfers where the payment service provider of the payer is established outside the Union, the information referred to in Article 4(1), points (a), (b) and (c), and Article 4(2), points (a) and (b), in respect of that batch file transfer.
1. In the case of transfers of funds exceeding EUR 1 000, whether those transfers are carried out in a single transaction or in several transactions which appear to be linked, before crediting the payee’s payment account or making the funds available to the payee, the payment service provider of the payee shall verify the accuracy of the information on the payee referred to in paragraph 2 of this Article on the basis of documents, data or information obtained from a reliable and independent source, without prejudice to the requirements laid down in Articles 83 and 84 of Directive (EU) 2015/2366.
1. In the case of transfers of funds not exceeding EUR 1 000 that do not appear to be linked to other transfers of funds which, together with the transfer in question, exceed EUR 1 000, the payment service provider of the payee need not verify the accuracy of the information on the payee, unless the payment service provider of the payee:
  1. effects the pay-out of the funds in cash or in anonymous electronic money; or
  2. has reasonable grounds for suspecting money laundering or terrorist financing.
1. Verification as referred to in paragraphs 3 and 4 of this Article shall be deemed to have taken place where one of the following applies:
  1. the identity of the payee has been verified in accordance with Article 13 of Directive (EU) 2015/849 and the information obtained pursuant to that verification has been retained in accordance with Article 40 of that Directive;
  2. Article 14(5) of Directive (EU) 2015/849 applies to the payee.

Relevant recitals

Recital 29 Verification threshold of EUR 1 000 for transfers of funds

In order not to impair the efficiency of payment systems and in order to balance the risk of driving transactions underground as a result of overly strict identification requirements against the potential terrorist threat posed by small transfers of funds, the obligation to check whether information on the payer or the payee is accurate should, in the case of transfers of funds where verification has not yet taken place, be imposed only in respect of individual transfers of funds that exceed EUR 1 000, unless the transfer appears to be linked to other transfers of funds which together would exceed EUR 1 000, the funds have been received or paid out in cash or in anonymous electronic money, or where there are reasonable grounds for suspecting money laundering or terrorist financing.

Recital 31 No re-verification where customer due diligence has already taken place

For transfers of funds or for transfers of crypto-assets where verification is deemed to have taken place, payment service providers and crypto-asset service providers should not be required to verify the accuracy of the information on the payer or the payee accompanying each transfer of funds, or on the originator and the beneficiary accompanying each transfer of crypto-assets, provided that the obligations laid down in Directive (EU) 2015/849 are met.

Recital 42 Payee-side procedures to detect missing fund transfer information

In order to check whether the required information on the payer and the payee accompanies transfers of funds, and to help identify suspicious transactions, the payment service provider of the payee and the intermediary payment service provider should have effective procedures in place to detect whether information on the payer and the payee is missing or incomplete. Those procedures should include monitoring after or during the transfers where appropriate. Competent authorities should ensure that payment service providers include the required transaction information with the wire transfer or related message throughout the payment chain.

Table of contents

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