Anti-Money Laundering and the Allocation of Responsibilities Between Banks and Non-Banks

In their role as gatekeeper of the financial market, payment service providers (PSPs) have the responsibility to take adequate measures for ensuring that they are not used for money laundering or terrorist financing (ML/TF) purposes. Since ML/TF activities often take place in an international context, effective anti-money laundering and anti-terrorist financing (AML/CTF) policies require a European-wide approach. To this end, the European legislature has adopted numerous directives and regulations to address the ML/TF risk exposures in the market for electronic payments (Payments), such as MLD4, MLD6, WTR2 and the sanction regulations. Given that the execution of a Payment transaction often requires the involvement of multiple PSPs, it is essential that banks and Non-Banks implement adequate AML/CTF measures. This chapter covers the AML/CTF measures that both banks and Non-Banks must implement under the European legislative framework. One of the main obligations imposed on PSPs in this regard is the requirement to subject their payment service users to a customer due diligence process. Furthermore, this chapter addresses the allocation of these AML/CTF responsibilities between banks and Non-Banks in situations where both types of PSPs are involved in the processing of a Payment, e.g., in the case of an open banking Payment solution.