FATF, the global AML watchdog, is looking to understand the anti-money laundering pinch-points faced by businesses that send money overseas – have your say here and help shape the future of cross-border payments.

Once upon a time, sending money overseas required a boat, a good compass and favourable winds. Thankfully, the process is now much quicker, cheaper and less risky – but that’s not to say it couldn’t be improved. The trick is ensuring that speeding up and simplifying cross-border payments doesn’t amplify the risks.

We hear a lot about ‘frictionless payments’ – fintechs, incumbents and authorities are all working hard to enable instant, pain-free and seamless payment flows between bank accounts, digital wallets and online platforms. Huge progress has been made in many domestic markets, but the need for meaningful international collaboration means that cross-border payments are still difficult to navigate without encountering friction. Despite money remittance and other cross-border payment flows being massive business, it can still take 10 days and up to 10% in transaction costs to send money to another country.

The G20 group of countries has therefore decided that it is time to overhaul cross-border payments. Over the past year we’ve seen reports and roadmaps – from the Financial Stability Board and the Committee on Payments and Market Infrastructures among others – setting out how to improve the infrastructure for sending money overseas, and being added to the G20's priorities means there is a sense that real change is on the horizon.

But perhaps ‘frictionless’ payments are a red herring. Some friction is positive and necessary – people often don’t mind taking additional verification steps if they offer protection from fraud (eg that fingerprint scan which would prevent someone else from sending a large payment from your phone). Similarly, AML checks may prevent instant settlement of payments and arguably cause ‘friction’, but the justification for putting the brakes on is clear.

As the G20 and international bodies move to enable quicker and cheaper cross-border payments, FATF is now looking for your assistance in working out which AML processes generate positive friction and which processes create unnecessary / negative friction. Answering the questionnaire will help FATF and other standard-setting bodies to identify and hopefully eliminate duplicative and divergent AML rules. These create real pinch-points for businesses – we often hear about inconsistent requirements for customer identity documents, duplicative sanction screening regulations, and barriers to data sharing/transfer – and only once they are rooted out will cross-border payments be plain sailing.

The deadline for responses is 15 January 2021.