On 26 February 2024, the Financial Action Task Force (FATF) announced it is considering revisions to Recommendation 16 (R.16), its Interpretive Note (INR.16) and the related glossary of specific terms, to adapt them to the changes in payment business models and messaging standards.

In the press release, the FATF outlines how R.16 and INR.16 must be updated to ensure that the FATF Standards remain technology neutral and follow the principle of ‘same activity, same risk, same rules’. These proposed revisions have the overarching aims of making cross border payments faster, cheaper, more transparent and inclusive whilst remaining safe and secure. They align with the G20 Priority Action Plan. Before finalising the revisions however, the FATF is seeking opinions from all interested stakeholders, in particular from the payments industry. The proposed revisions are attached to the explanatory memorandum, which also cover the policy intent behind each of the key proposals in detail.

The explanatory memorandum contains eighteen questions for consultation on various subjects including:

  • Additional transparency requirements on exemption for purchase of goods and services using cards.
  • Removal of the withdrawal or purchase of cash or a cash equivalent from R.16 exemption, subject to certain conditions. 
  • Improving the content and quality of basic originator and beneficiary information in payment messages.
  • Obligations on beneficiary financial institutions to check alignment of beneficiary information in payment messages. 
  • Definition of payment chain and conditions for net settlement.

The FATF states this consultation marks the first step in a wider consultation process, which will include further discussion and engagement informed by this initial consultation.

The deadline for responses is 3 May 2024.