EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 26.7.2005 
COM(2005) 343 final 
2005/0138 (COD)   
Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
on information on the payer accompanying transfers of funds 
(presented by the Commission) 
 
EN 2   EN EXPLANATORY MEMORANDUM  
1) CONTEXT OF THE PROPOSAL  
110 • Grounds for and objectives of the proposal  
The present proposal for a Regulation aims  to transpose Special Recommendation VII 
on “wire transfers” (SR VII) of the Fina ncial Action Task Force (FATF) into 
Community legislation.1 
The proposal lays down rules on information on the payer accompanying transfers of 
funds, in order to ensure that basic info rmation is immediately available to the 
authorities responsible for combating m oney laundering and terrorist financing, to 
assist them in their task.  
According to its revised interpretative note , which was adopted on 10 June 2005, 
SR VII should be transposed by December 2006. 
120 • General context  
The worldwide escalation of acts of terrorism  in the last decade has mobilised the 
international community to develop appropria te measures to combat this phenomenon. 
Following the terrorist attacks of 11 Sept ember 2001 in the United States, combating 
terrorism has become a key pol itical priority worldwide. At its extraordinary meeting 
on 21 September 2001, the European Council deci ded that the fight against terrorism 
will, more than ever, be a key objective of the European Union, and adopted a Plan of 
Action to Combat Terrorism. 
Following the attacks in Madrid of 11 Ma rch 2004, the European  Council adopted, on 
25 March 2004, a Declaration on combating terrorism and revi sed its Plan of Action to 
Combat Terrorism. The Declaration committe d the Union and its members "(…) to do 
everything within their power to combat a ll forms of terrorism (…)" and identified a 
number of strategic objectives to help achie ve this goal. These include a requirement 
on the Union and its members to take all n ecessary measures "to reduce the access of 
terrorists to financial and other economic re sources". The revised "EU Plan of Action 
on combating terrorism" acknowledges that the legislative framework created by the 
Union for the purpose of combating terrorism  and improving judicial cooperation has a 
decisive role to play in combating terroris t activities and sets out  detailed proposals for 
developing the fight against te rrorist financing. One of these measures consists in close 
co-operation with the FATF and the adaptation  of the EU legislative framework to the 
nine Special Recommendations on terrori st financing adopted by the FATF.  
In combination with the FATF Forty Reco mmendations on money laundering adopted 
in 1990 and revised in 2003, Special Recommendations I to IX set out the basic framework to detect, prevent and suppress the financing of terrorism and terrorist acts 
at international level. FATF rules are genera lly accepted as the inte rnational standard in 
the fight against money launde ring and terrorist financing. 
                                                
 
1 FATF is the international body established by the Pa ris G7 summit in 1989, and which is considered as 
the world standard in the fight against money laundering and terrorist financing. 
 
EN 3   EN EU Member States are committed to the impl ementation of FATF standards. Most of 
the measures set out in the nine Special R ecommendations of the FATF have been or 
are in the process of being implemented e ither through Community  legislation, or 
through the procedures establis hed under Titles V and VI of  the Treaty of the European 
Union.  
130 • Existing provisions in the area of the proposal  
Council Regulations (EC) No 2580/2001 of 27 December 20012 and (EC) No 881/2002 
of 27 May 20023 relate to the freezing of terrorist s’ assets. The provisions of these 
Regulations however only apply to targeted i ndividuals or groups which are considered 
as terrorists by the United Nations Security Council.  
On the other hand, Directive 2005/…/EC of  the European Parliament and of the 
Council of ….2005 on prevention of the use of the financial system for the purpose of 
money laundering and terrorist financing contains a number of measures aimed at 
combating the misuse of the financial syst em for the purposes of  money laundering and 
terrorist financing. 
However, the measures described above do not fully prevent terrorists and other 
criminals from having access to payment sy stems to move their funds. The proposal 
complements those measures by ensuring th at basic information on the payer of 
transfers of funds is immedi ately available to appropria te law enforcement and/or 
prosecutorial authorities to as sist them in detecting, inves tigating, prosecuting terrorists 
or other criminals and tracing the assets of terrorists.  
140 • Consistency with the other policies and objectives of the Union  
The proposal is consistent with the objectives  of the European Council's Plan of Action 
to Combat Terrorism, which specifically addresses the need to ensure that the legislative framework created by the Co mmunity for the purpose of combating 
terrorism and improving judicial coopera tion is adapted to the nine Special 
Recommendations of the Financial Acti on Task Force on Money Laundering and 
Terrorist Financing.  
                                                
 
2 On specific restricted measures directed against cer tain persons and entities with a view to combating 
terrorism. OJ L 344, 28.12.2001, p. 70. Regulation as amended by Commission Regulation 
(EC) No 745/2003 (OJ L 106, 29.4.2003, p. 22). 
3 Imposing certain specific restrictive measures direct ed against certain persons and entities associated 
with Usama Bin Laden, the Al-Qaida network and the Taliban, and repealing Council Regulation 
(EC) No 467/2001 prohibiting the exports of certain goods and services to Afghanistan, strengthening the flight ban and extending the freeze of funds and othe r financial resources in respect of the Taliban of 
Afghanistan. OJ L 139, 29.5.2002, p. 9. Regulation as last amended by Commission Regulation 
(EC) No 2034/2004 (OJ L 353, 27.11.2004, p. 11). 
 
EN 4   EN 2) CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT  
 • Consultation of interested parties  
211 Consultation methods, main sectors targ eted and general pr ofile of respondents  
In its Communication to the Council and the European Parliament concerning a "New 
legal framework for payments in the In ternal Market", the Commission consulted 
interested parties on issues raised by the transposition of SR VII into Community 
legislation. In addition, The Commission exte nsively consulted major stakeholders by 
means of targeted meetings of consultative Committees (Payment Systems Government expert Group, Payment Syst ems Market Group and Money Laundering 
Contact Committee). 
212 Summary of responses and how th ey have been taken into account  
The main issues addressed in the Comm unication on a "New legal framework for 
payments in the Internal Market" were: (1 ) the transposition of  SR VII by Community 
legislation versus national le gislation; (2) the information regime applicable within the 
EU; (3) the need for derogation from the pr inciple of complete information on the 
payer as regards batch transf ers between jurisdictions and (4) the need for exemptions 
or thresholds. 
(1) The transposition of SR VII through Community legislati on versus national 
legislation 
The results of the consultation have shown overwhelming support from all stakeholders 
(the banking community, national central banks, the European Central Bank and 
Member States) to transpose SR VII thr ough Community legisl ation rather than 
national legislation.  
(2) The information regime applicable within the EU: the contents of information on 
the payer as regards tran sfers of funds within and between Member States 
According to SR VII, information on the pa yer accompanying transfers of funds inside 
a jurisdiction can be limited to the account nu mber of the payer, provided complete 
information on the payer (name, address a nd account number) can be delivered within 
three working days, upon request, by the PSP of the payer to the PSP of the payee. As this rule is enforceable within the Commun ity by way of Community legislation, it is 
sufficient to require transfers of funds with in the EU to be accompanied by the account 
number of the payer. In cases where either  the PSP of the payer or of the payee are 
situated outside the EU, complete information on the payer should be transmitted.  
The present proposal therefore establishes that simplified information (the account 
number of the payer or a unique identifier) has to be applied to transfers of funds 
within the EU, whereas complete informa tion on the payer has to be applied to 
transfers of funds between the EU and other jurisdictions. This  is fully in line with the 
results of the public consultation. 
(3) The need for derogation from the principle of complete information on the payer as 
regards batch transfers between jurisdictions 
 
EN 5   EN The FATF's original interpretative not e on SR VII (INSR VII) exempted batch 
transfers between jurisdictions (except those sent by money remitters) from carrying complete information on the payer. By derogation from the complete information regime that applies between jurisdictions, batch transfers needed only carry the account 
number of the payer or a unique identifier. However, the term "batch" was not defined 
in the original FATF's INSR VII. This ab sence of definition made the scope of the 
derogation unclear. In the context of paymen t systems, the term "batch transfers" can 
have very different meanings. Without a harmonised definition, a common understanding of the derogation by PSPs was unlikely, and maybe not even possible. 
The banking community and the majority of Me mber States recognise the need for this 
derogation as regards individual transfers fr om a single payer that are contained in a 
batch file for transmission to payees outside  the Community. This process specifically 
refers to bundling together groupings of individual transf ers from a single payer to 
several payees (typically certa in type of routine transfer s, like social security 
payments), which does not allow, for cost/efficiency reasons, to include complete information on the payer with each individual transfer, but only on the batch file which contains them. The same understanding now applies in the FATF, after a revision of 
the original INSR VII. The present proposal  therefore contains a specific provision 
allowing for transfers of funds from a single payer which are contained in a batch file 
for transmission to payees outside the Comm unity, to only carry the account number of 
the payer, provided the batch file contai ns complete information on the payer. 
(4) The need for exemptions or thresholds 
The initial interpretative note on SR VII establ ished that jurisdictions could have a de 
minimis threshold (no higher than USD 3 000). This exempti on was nevertheless 
meant to be temporary and subject to revi ew by the FATF in 2004. This review took 
place between February 2004 and June 2005 and materialised in a revised INSR VII, 
which was approved on 10 June 2005. Such review gave rise to an extensive consultation of the payments industry as well  as of the Member States. The results of 
the consultation show that the payments  industry is in general opposed to the 
application of thresholds, as this would n ecessitate putting in place dual systems for 
dealing with transfers of funds below a nd above thresholds. Other stakeholders 
(Member States, national central banks and the European Central Bank) are generally 
not supportive either. In a ddition, a study by the FATF show s that even small amounts 
can be used to finance terrorism. On the ot her hand, there are concer ns that too strict 
identification requirements may drive tran sactions underground, where the ability of 
authorities to obtain any information is c onsiderably compromised. Consequently, the 
present proposal does not retain any threshol d either for outgoing transfers from the EU 
or incoming transfers in the EU, as regards the collection and transmittal of information on the payer. It therefore provi des for incoming anonymous transfers in the 
EU to be subject to special vigilance and to appropriate measur es destined to get 
missing information on the payer. It also es tablishes that outgoing transfers of funds 
from the EU shall be accompanied by complete information on the payer, but in order to take into account the risk of driving tr ansactions underground, fl exibility is however 
allowed as regards the extent of verifica tion of information on the payer, on a risk-
sensitive basis. 
213 An open consultation was conducted over th e internet from 02/12/2003 to 15/02/2004. 
The Commission received 103 response( s). The results are available on 
 
EN 6   EN http://europa.eu.int/comm/internal_market/payments/framework/2004-
contributions_en.htm . 
 • Collection and use of expertise  
229 There was no need for external expertise. 
230 • Impact assessment  
The proposal was not submitted for impact assessment as it derives from international 
obligations and has no significant cross-cut ting impact. In addition, it was submitted to 
extensive consultation by all stakeholders.  
It transposes SR VII of the FATF in a way that minimises costs for the payments 
industry while at the same time ensuring a high standard in the fight against money 
laundering and terrorist financing. 
3) LEGAL ELEMENTS OF THE PROPOSAL  
305 • Summary of the proposed action  
The proposal establishes rules aimed at esta blishing the traceability  of transfers of 
funds, which are applicable to all the PSPs involved in the payment chain. The PSP of 
the payer must ensure that transfers of funds contain complete, accurate and 
meaningful information on the payer. Any intermediary PSP must ensure that all 
information on the payer that accompanies a tr ansfer is retained w ith the transfer or 
that appropriate records are kept. The PSP of th e payee must be able to detect a lack of 
presence of information on the payer when receiving transfers an d take appropriate 
steps in order to correct this situation, so that received tr ansfers of funds do not remain 
anonymous. While doing so, it must exert a spec ial vigilance regarding such transfers 
and, on a risk sensitive basis, taking into account other pertinen t factors, report 
suspicious transactions to the authorities responsible for combating money laundering and terrorist financing. PSPs should also keep appropriate  records and respond fully 
and rapidly to enquiries by the authorities responsible for combating money laundering 
and terrorist financing of the Memb er State where they are situated. 
310 • Legal basis  
Aricle 95 of the Treaty establ ishing the European Community. 
320 • Subsidiarity principle  
The subsidiarity principle applies inso far as the proposal does not fall under the 
exclusive competence of the Community. 
 The objectives of the proposal cannot be sufficiently achieved by the Member States 
for the following reason(s). 
323 Non-coordinated action by Member  States alone in the fiel d of cross-border transfers 
of funds could significantly impact on the smooth functi oning of payment systems at 
EU level, and therefore damage the Internal Market in the field of  financial services.  
 
EN 7   EN  Community action will better achieve the obj ectives of the proposal for the following 
reason(s): 
324 By the scale of its action, Community action shall guarantee a uniform transposition of 
SR VII throughout the EU, and in particular , that there is no discrimination between 
national payments within a Member State and cross-border payments between Member 
States. This principle wa s established by Regulation (EC) No 2560/2001 on cross-
border payments in euro, whic h was the first significant step towards the establishment 
of a Single Payment Area in the EU. 
325 There is a general consensus, emanating from  all stakeholders (in particular Member 
States and the payments industry), that the objectives of the action can be better 
achieved by the Union. 
327 The scope of the proposal, which coincides with the measures foreseen in SR VII cannot, by its nature, and in or der to avoid inconsistencies,  be divided into Community 
action and action by Member States.  
 The proposal therefore complies wi th the subsidiarity principle. 
 • Proportionality principle  
The proposal complies with the proportionali ty principle for the following reason(s). 
331 In conformity with the results of the c onsultation process, th e proposal transposes 
SR VII in the simplest way, by providing a si mplified regime within the EU and a cost-
effective system in order to ensure the tr aceability of transfers of funds to and from 
third countries. It does not go beyond what is necessary to ac hieve its objectives. 
332 By establishing obligations applicable to payment service providers, which minimise 
the cost for the payments industry, the proposal therefore minimises the financial burden for national governments, economic operators and citizens. 
 • Choice of instruments  
341 Proposed instrument: regulation. 
342 Other means would not be adequate for the following reason(s): 
Payment systems in the EU are in the proce ss of being integrated into a Single Payment 
Area and, consequently, SR VII should be  implemented in a harmonised manner 
throughout the EU. All stakeholders called fo r the use of a regulat ion, which would be 
the most effective way of guaranteeing un iform implementation and thus a level 
playing field. 
4) BUDGETARY IMPLICATION  
401 Meetings of the Committee on the Preven tion of Money Laundering and Terrorist 
Financing.  
 
EN 8   EN 5) ADDITIONAL INFORMATION  
560 • European Economic Area  
The proposed act concerns an EEA matter a nd should therefore exte nd to the European 
Economic Area. 
 
EN 9   EN  
2005/0138 (COD) 
Proposal for a 
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 
on information on the payer accompanying transfers of funds 
 
(Text with EEA relevance)  
THE EUROPEAN PARLIAMENT AND THE CO UNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing th e European Community, and in particular 
Article 95 thereof, 
Having regard to the proposal from the Commission4 
Having regard to the opinion of the Eu ropean Economic and Social Committee5 
Having regard to the opinion of  the Committee of the Regions6 
Having regard to the opinion of  the European Central Bank7 
Acting in accordance with the procedure laid down in Article 251 of the Treaty8, 
Whereas: (1) In the wake of the terrorist at tacks in the USA on 11 September 2001, the 
extraordinary European Council on 21 Septem ber 2001 reiterated that  the fight against 
terrorism is a key objective of the European Union. The European Council approved a 
plan of action dealing with enhanced poli ce and judicial co-operation, developing 
international legal instruments against terrorism, preventing terrorist funding, 
strengthening air security and greater consis tency between all relevant policies. This 
plan of action was revised by the European  Council following the te rrorist attacks of 
11 March 2004 in Madrid, and now  specifically addresses the need to ensure that the 
legislative framework created by the Co mmunity for the purpose of combating 
terrorism and improving judicial cooperation is adapted to the nine Special 
Recommendations against Terrorist Financ ing adopted by the Financial Action Task 
Force on Money Laundering and Te rrorist Financing (FATF).  
                                                
 
4 OJ C , , p. . 
5 OJ C , , p. . 
6 OJ C , , p. . 
7 OJ C , , p. . 
8 OJ C , , p. . 
 
EN 10   EN (2) In order to prevent terrorist funding, m easures aimed at the freezing of funds and 
economic resources of certain persons, groups  and entities have been taken, including 
Council Regulation (EC) No 2580/2001 of 27 December 2001 on specific restrictive 
measures directed against certain persons and entities with a view to combating 
terrorism9, and Council Regulation (EC) No 881/2002 of 27 May 2002 imposing 
certain specific restrictive measures dire cted against certain persons and entities 
associated with Usama bin Laden, the Al-Qaida network and the Taliban, and 
repealing Council Regulation (EC) No 467/ 2001 prohibiting the export of certain 
goods and services to Afghani stan, strengthening the flig ht ban and extending the 
freeze of funds and other financial res ources in respect of the Taliban of 
Afghanistan10. To that same end, measures aimed at protecting the financial system 
against the channelling of funds and economic resources for terrorist purposes have 
been taken. Directive 2005/…/EC of the Eu ropean Parliament and of the Council of 
… 2005 on prevention of the use of the financ ial system for the purposes of money 
laundering and terrorist financing11 contains a number of measures aimed at combating 
the misuse of the financial system for th e purpose of money la undering and terrorist 
financing. All those measures do not, howev er, fully prevent terrorists and other 
criminals from having access to payment systems for moving their funds.  
(3) In order to foster a cohe rent approach in the internat ional context in the field of 
combating money laundering and terrorist fi nancing, further Community action should 
take account of developments at that level,  namely the nine Sp ecial Recommendations 
against Terrorist Financing adopted by the FATF and in particular Special 
Recommendation VII (SR VII) on wire transfer s, and the revised interpretative note 
for its implementation.  
(4) The full traceability of transfers of funds can be a particularly important and valuable 
tool in the prevention, inve stigation, detection and pros ecution of money laundering 
and the financing of terrorism . It is therefore appropriat e, in order to  ensure the 
transmission of information on the payer th roughout the payment chain, to provide for 
a system imposing the obligation on payment service providers to have transfers of 
funds accompanied by accurate and mean ingful information on the payer. 
(5) The provisions of this Regulation apply wit hout prejudice to Direct ive 95/46/EC of the 
European Parliament and of the Counc il of 24 October 1995 on the protection of 
individuals with regard  to the processing of personal da ta and on the free movement of 
such data12. 
(6) Due to the lower risk of money launderi ng or terrorist financ ing associated with 
transfers of funds that flow from a commer cial transaction or where the payer and the 
payee are payment service providers acting on their own behalf, it is appropriate to 
exempt such transfers from the scope of th is Regulation, under the condition that it is 
always possible to trace them back to the payer.  
                                                 
9 OJ L 344, 28.12.2001, p. 70. Regulation as amended by Commission Regulation (EC) No 745/2003 
(OJ L 106, 29.4.2003, p. 22). 
10 OJ L 139, 29.5.2002, p. 9. Regulation as last amended by Commission Regulation (EC) No 2034/2004 
(OJ L 353, 27.11.2004, p. 11). 
11 OJ L …, ……2005, p. .. (to be published, 2004/0137/COD). 
12 OJ L 281, 23.11.1995, p. 31 
 
EN 11   EN (7) In order to balance the ri sk of driving transactions underground by applying too strict 
identification requirements against the pot ential terrorist threat posed by small 
transfers, the obligation to verify that th e information on the payer is accurate should 
be able to be applied on a ri sk-sensitive basis, as regards transfers of funds to payees 
outside the Community up to EUR 1 000. 
(8) Against the background of Regulation (EC) No 2560/2001 of the European Parliament 
and of the Council of 19 December 2001 on cross-border payments in euro13 and the 
Commission Communication “A New Legal Framework for Payments in the Internal 
Market”14, it is sufficient to provide for simplified information on the payer to 
accompany transfers of funds within the Community. 
(9) In order to allow the authorities responsible for combating money laundering or 
terrorist financing in third countries to trace the source of funds used for money 
laundering or the financing of terrorism, tr ansfers of funds from the Community to 
third countries should carry complete in formation on the payer. Access, by those 
authorities, to complete information on th e payer should only be granted for the 
purposes of preventing, invest igating, detecting and pros ecuting money laundering or 
terrorist financing. 
(10) For transfers of funds fr om a single payer to several payees to be sent in an 
inexpensive way in batch fi les containing individual tr ansfers, such individual 
transfers should be able to carry only the account number of the payer, provided that 
the batch file contains complete information on the payer. 
(11) In order to check whether the required  information on the payer accompanies transfers 
of funds, and to help to identify suspicious  transactions, the paym ent service provider 
of the payee should have effective procedures in order to detect a lack of presence of 
information on the payer. 
(12) Due to the potential terrorist financi ng threat posed by anonymous transfers, it is 
appropriate to enable the payment service provider of the payee to avoid or correct 
such situations when becoming aware of a lack of presence or incompleteness of 
information on the payer. In this regard, flexibility should be allowed as regards the extent of information on the payer on a risk-sensitive basis. In addition, the accuracy and completeness of information on the paye r should remain in th e responsibility of 
the payment service provider of the paye r. In the case where the payment service 
provider of the payer is si tuated outside the Communit y, enhanced customer due 
diligence should be applied, in accordance w ith Article [11] of Directive 2005/…/EC, 
in respect of cross-frontie r correspondent banking relatio nships with that payment 
service provider. 
(13) In any event, the payment service provider of the payee should exert special vigilance, 
on a risk-based assessment, when becoming aware of a lack of presence or incompleteness of information on the payer, and should report susp icious transactions 
to the competent authorities. 
                                                
 
13 OJ L 344, 28.12.2001, p. 13. 
14 COM (2003) 718 final. 
 
EN 12   EN (14) Until technical limitations that may prevent intermediary payment service providers 
from satisfying the obligation of transmitting all the received information on the payer, 
are removed, those intermediary payment serv ice providers should k eep records of that 
information. Such technical limitations should be removed as soon as payment 
systems are upgraded. 
(15) Since, in criminal investigations, it may not be possible to identif y the data required or 
the individuals involved until many months or even years after the original transfer of 
funds, it is appropriate to require paymen t service providers to keep records of 
information on the payer for the purposes of  preventing, investigating, detecting and 
prosecuting money laundering or  terrorist financing. In a democratic society, this 
period should be limited. It is appropriate that this pe riod be set to five years. 
(16) To make for rapid action in the framew ork of combating terrorism, payment service 
providers should respond rapidly to request s for information on the payer from the 
authorities responsible for combating mone y laundering or terrorist financing in the 
Member State where they are established. 
(17) Given the importance of the combat agai nst money laundering a nd terrorist financing, 
Member States should lay down effective, proportionate and dissuasive penalties in 
national law for failure to comply wi th the provisions of this Regulation. 
(18) The measures necessary for the implemen tation of this Regulation should be adopted 
in accordance with Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of impl ementing powers conferred on the Commission
15. 
(19) A number of countries a nd territories which do not form part of the territory of the 
Community share a monetary union or form part of the currency area of a Member 
State and have established membership of the payment and cleari ng systems of that 
Member State. In order to avoid a signifi cant negative effect on the economies of those 
countries or territories which could result fr om the application of this Regulation to 
transfers of funds between the Member St ates concerned and those countries or 
territories, it is appropriate to  provide for the possibility fo r such transfers of funds to 
be treated as transfers of funds  within that Member State. 
(20) In order not to discourage donations for charitable purposes, it  is appropriate to 
authorise Member States to exempt paymen t services providers situated in their 
territory from collecting, verifying, recordi ng, or sending information on the payer for 
transfers of funds up to a ma ximum amount of EUR 150. It is also appropriate to make 
this option conditional upon requirements to be met by the charitable organisations in 
order to allow Member States to ensure that this exemption does not  give rise to abuse 
by terrorists as a cover for or a means of facilitating the financing of their activities. 
(21) Since the objectives of the action to be taken cannot be  sufficiently achieved by the 
Member States and can therefore, by reason  of the scale or effects of the action, be 
better achieved at Community level, the Community may adopt measures, in 
accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In 
                                                 
15 OJ L 184, 17.7.1999, p. 23. 
 
EN 13   EN accordance with the principle of proportional ity, as set out in that Article, this 
Regulation does not go beyond what  is necessary in order to  achieve those objectives. 
(22) In order to establish a coherent approach in  the field of comba ting money laundering 
and terrorist financing, the main provisions of this regulation should apply from the 
same date as the relevant provision s adopted at international level,  
HAVE ADOPTED THIS REGULATION: 
Chapter I 
Scope and definitions 
Article 1 
Subject matter 
This Regulation lays down rules on informati on to accompany transfers of funds, concerning 
the payers of those funds, for the purposes of  the prevention, investigation, detection and 
prosecution of money launderi ng and terrorist financing. 
Article 2 
Scope 
1. This Regulation shall apply to  transfers of funds in any currency which are sent or 
received by a payment service provi der established in the Community. 
2. This Regulation shall not apply to transfer s of funds which flow from a commercial 
transaction carried out using a credit or debit card or any other similar payment 
instrument, provided that a unique identifi er, allowing the transaction to be traced 
back to the payer, accompanies all transfer s of funds flowing from that commercial 
transaction.  
This Regulation shall not apply to transf ers of funds where both the payer and the 
payee are payment service provide rs acting on their own behalf. 
Article 3 
Definitions 
For the purposes of this Regulation, th e following definitions shall apply: 
1. “terrorist financing” means any of the o ffences within the meaning of Article [1(3)] 
of Directive 2005/…/EC; 
2. “money laundering” means any of the offen ces within the meaning of Article [1(2)] 
of Directive 2005/…/EC;  
3. “payer” means a natural or legal person who has the right of disposal of funds and 
who allows them to be transferred to a payee; 
 
EN 14   EN 4. “payee” means a natural or legal person who is the intended final recipient of 
transferred funds; 
5. “payment service provider” means a natu ral or legal person w hose business includes 
the provision of paym ent services to payment service users; 
6. “intermediary payment service provider” m eans a payment service provider which is 
neither that of the payer nor that of the payee and which participates in the execution 
of transfers of funds;  
7. “transfer of funds” means any transaction carried out on behalf of a payer through a 
payment service provider by electronic means with a view to making funds available 
to a payee at another payment service provi der, irrespective of whether the payer and 
the payee are the same person; 
8. “payment service user” means a natural or  legal person who ma kes use of a payment 
service, in the capacity  of payer or payee; 
9. “batch file transfer” means several indi vidual transfers of funds which are bundled 
together for transmission. 
Chapter II 
Obligations for the payment service provider of the payer 
Article 4 
Complete information on the payer 
Complete information on the payer shall cons ist of his name, address and account number. 
The address may be substituted with the date a nd place of birth of the payer, his customer 
identification number or national identity number. 
Where the account number of the payer does not exist, the payment serv ice provider of the 
payer may substitute it by a unique identifier, whic h allows the transaction to be traced back 
to the payer. 
Article 5 
Information accompanying transfers of funds and record keeping 
1. Payment service providers shall ensure th at transfers of funds  are accompanied by 
the complete information on the payer. 
2. The payment service provider of the payer shall, before tr ansferring the funds, verify 
the complete information on the payer on the basis of documents, data or information 
obtained from a reliable and independent source. 
However, for transfers of funds to payees  outside the Community up to an amount of 
EUR 1 000, payment service providers may dete rmine the extent of such verification 
in view of the risks of money laundering and terrorist financing.  
 
EN 15   EN 3. The payment service provider of the payer shall keep records for five years of 
complete information on the payer wh ich accompanies transfers of funds. 
Article 6 
Transfers of funds within the Community 
By way of derogation from Article 5, transf ers of funds, where both the payment service 
provider of the payer and the payment service provider of the payee are situated in the 
Community, shall only be required to be accomp anied by the account number of the payer or 
a unique identifier allowing the transacti on to be traced back to the payer. 
However, if so requested by the payment servi ce provider of the payee, the payment service 
provider of the payer shall make available to the payment service provider of the payee, complete information on the payer, within th ree working days of receiving that request. 
Article 7 
Transfers of funds from the Community  to payees outside the Community 
1. Transfers of funds from the Community to  payees outside the Community shall be 
accompanied by complete information on the payer. 
2. In the case of batch file  transfers from a single pa yer to payees outside the 
Community, paragraph 1 shall not apply to the individual transf ers bundled together 
therein, provided that the batch file contai ns that information and that the individual 
transfers carry the account number of  the payer or a unique identifier. 
Chapter III 
Obligations for the payment service provider of the payee 
Article 8 
Detection of lack of presence of information on the payer  
The payment service provider of the payee shall ha ve effective procedures in place in order to 
detect a lack of presence of the following information on the payer: 
(1) For transfers of funds where the payment serv ice provider of the pa yer is situated in 
the Community, the information required under Article 6. 
(2) For transfers of funds  where the payment service provid er of the payer is situated 
outside the Community, complete information on the payer as referred to in Article 4, 
or, where applicable, the inform ation required under Article 13. 
Article 9 
Transfers of funds lacking information on the payer 
1. If the payment service provider of the pa yee becomes aware that information on the 
payer required under this Regulation is missing or incomplete when receiving 
 
EN 16   EN transfers of funds, it may either reject the transfer, or ask for complete information 
on the payer. In the latter case, the payment service provider of the payee may either hold the funds pending enquiry or make the funds available to the payee. In all cases, 
the payment service provider of the payee shall comply with any applicable law or administrative provisions relating to mone y laundering and terr orist financing, in 
particular, Regulations (EC) No 2 580/2001 and (EC) No 881/2002 and Directive 
2005/…/EC, as well as national implementing measures. 
2. Where a payment service provider repeatedly fails to supply the required information 
on the payer, the payment service provider of  the payee shall reject any transfers of 
funds from that payment service provider or terminate its business relationship with 
that payment service provider e ither with resp ect to transfer of f unds services or with 
respect to any mutual  supply of services. 
The payment service provider of the payee shall report that fact to the authorities 
responsible for combating money laundering or terrorist financing. 
Article 10 
Risk-based assessment 
The payment service provider of the payee sha ll consider incomplete information on the payer 
as a factor in assessing whether the transfer of funds, or any re lated transaction, is suspicious, 
and whether it must be reported, in accordance with  the obligations set out in Chapter III of 
Directive 2005/…/EC, to the authorities responsible for combating money laundering or 
terrorist financing. 
Article 11 
Record keeping 
The payment service provider of the payee sh all keep records for five years, of any 
information received on the payer. 
Chapter IV 
Obligations for intermediary  payment service providers 
Article 12 
Retaining information on th e payer with the transfer 
Intermediary payment service providers shall ensu re that all received information on the payer 
that accompanies a transf er of funds is retain ed with the transfer. 
Article 13 
Technical limitations 
1. Where the payment service provider of th e payer is situated outside the Community 
and technical limitations at the level of an intermediary payment service provider situated in the Community prevent the in formation on the payer from accompanying 
 
EN 17   EN the transfer of funds, that intermediary payment service provider shall keep records 
for five years of all the information receive d, irrespective of whether that information 
is complete or not. 
2. If, in the case referred to in paragraph 1, an intermediary payment service provider 
does not receive complete information on the payer, it shall inform the payment service provider of the payee accordingly, when transferring the funds. 
3. Where paragraph 1 applies, the intermed iary payment service provider shall, upon 
request from the payment service provider of the payee, make available to that 
payment service provider, complete information on the payer, within three working days of receiving that request. 
Chapter V 
General obligations, implemen ting and amending powers 
Article 14 
Co-operation obligations 
Payment service providers sha ll respond fully and without de lay to enquiries from the 
authorities responsible for combating money la undering or terrorist financing of the Member 
State in which the payment service provider is  situated, concerning the information on the 
payer accompanying transfers of  funds and corresponding record s, in accordan ce with the 
time-limits and procedural requirements establis hed in the national law of that Member State.  
Those authorities may use that  information only for the purposes of preventing, investigating, 
detecting or prosecuting money la undering or terrorist financing. 
Article 15 
Penalties 
The Member States shall lay down the rules on pe nalties applicable to infringements of the 
provisions of this Regulation and shall take all measures necessary to ensure that they are 
implemented. The penalties provided for must be  effective, proportionate and dissuasive. The 
Member States shall notify those rules, as well as the authorities responsible for their 
application, to the Commission by 31 December 2006 at the latest, and shall notify it without 
delay of any subsequent amendment affecting them.  
Article 16 
Implementing and amending powers 
1. The Commission may, in accordance with the procedure referred to in Article 17(2) 
and taking into account any developments in the field of money laundering and terrorist financing, and corresponding change s in international standards, notably 
those agreed in the Financial Action Ta sk Force on money laundering and terrorist 
financing (FATF), adopt measures concerning the clarification of the definitions set 
out in Article 3(5) and (7). 
 
EN 18   EN 2. The Commission may, in accordance with the procedure referred to in Article 17(2) 
and taking into account any developments in the field of money laundering and terrorist financing, and corresponding change s in international standards, notably 
those agreed in the FATF, adopt measures  concerning the updating of the monetary 
thresholds established for the obligat ions laid down in Articles 5 and 19. 
Article 17 
Committee 
1. The Commission shall be assisted by the Committee on the Prevention of Money 
Laundering and Terrorist Financing estab lished by Directive 2005/…/EC, hereinafter 
“the Committee”. 
2. Where reference is made to this pa ragraph, Articles 5 a nd 7 of Decision 
1999/468/EC shall apply, having regard to the provisions of Article 8 thereof. 
The period laid down in Article 5(6) of Decision 1999/468/EC shall be set at three 
months. 
Chapter VI 
Derogations 
Article 18 
Agreements with territories or countries outside the Community 
1. The Commission may authorise any Member State to conclude agreements with a 
country or territory which does not form pa rt of the territory of the Community as 
determined in accordance with Article 299 of the Treaty, which contain derogations from this Regulation in order to allow for transfers of funds betw een that country or 
territory and the Member State concerned to be treated as transf ers of funds within 
that Member State. 
Such agreements may be authorised only if the country or territory concerned fulfils 
all the following conditions: 
a) it shares a monetary union with the Me mber State concerned or forms part of 
the currency area of the Member State concerned; 
b) it is a member of the payment and clearing systems of the Member State 
concerned; 
c) it requires payment serv ice providers under its jurisdiction to apply the same 
rules as those establis hed under this Regulation. 
2. A Member State wishing to conclude an ag reement as referred to in paragraph 1 shall 
send an application to the Commission an d provide it with all the necessary 
information.  
 
EN 19   EN On receipt, by the Commission, of an applica tion from a Member State, transfers of 
funds between that Member State and the country or territory concerned shall be 
provisionally treated as tran sfers of funds within that Member State until a decision 
is reached in accordance with the procedure set out in this Article. 
If the Commission considers that it does not have all the necessary information, it 
shall contact the Member State concerned within two months of receipt of the 
application and specify the a dditional information required. 
Once the Commission has all the information it considers necessary for appraisal of 
the request, it shall within one month notif y the requesting Member State accordingly 
and shall transmit the request to the other Member States. 
3. Within three months of the notification re ferred to in the fourth sub-paragraph of 
paragraph 2 of this Article, the Commission shall decide, in accordance with the procedure referred to in Article 17(2), whether to authorise the Member State 
concerned to conclude the agreem ent referred to in paragraph 1. 
In any event, a decision as referred to in the first subparagraph shall be adopted 
within eighteen months of receipt of the application by the Commission. 
Article 19 
Transfers of funds to charitable orga nisations within a Member State 
Member States may exempt payment service provi ders situated in their territory from the 
obligations set out in Article 5, as regards tr ansfers of funds to or ganisations carrying out 
activities for charitable, religious, cultural, edu cational, social, or fr aternal purposes, provided 
these organisations are subject to  reporting and external audit requirements or supervision by 
a public authority, and that t hose transfers of funds are li mited to a maximum amount of 
EUR 150 per transfer and take pl ace exclusively within the territory of that Member State. 
Member States shall communicate to the Commissi on the measures that th ey have adopted for 
applying the option provided  in the first paragraph. 
Chapter VII 
Final provisions 
Article 20 
Entry into force 
This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of  the European Union . 
However, Articles 4 to 14 and 19 shall apply from 1 January 2007. 
This Regulation shall be binding in its entirety and is directly a pplicable in all Member States. 
 
EN 20   EN Done at Brussels,  
For the European Parliament For the Council 
The President The President 
 
EN 21   EN LEGISLATIVE FINANCIAL STATEMENT  
Policy area(s): Internal Market  
Activit(y/ies): Internal Market fo r goods and services  
 
TITLE OF ACTION : PROPOSAL FOR A REGULATION ON INFORMATION ON THE PAYER 
ACCOMPANYING TRANSFERS OF FUNDS  
1. BUDGET  LINE(S)  + HEADING(S) 
12.010211.01.03 – Committee meetings 
2. OVERALL  FIGURES   
2.1. Total allocation for action (Part B): € million for commitment 
n.a. 
2.2. Period of application: 
2005–2010 
2.3. Overall multiannual esti mate of expenditure: 
(a) Schedule of commitment appropriations /payment appropriations (financial 
intervention) (see point 6.1.1) 
n.a. 
(b) Technical and administrative a ssistance and support expenditure (see point 6.1.2) 
n.a. 
(c) Overall financial impact of human res ources and other administrative expenditure 
(see points 7.2 and 7.3) 
Commitments/ 
payments 0.224 0.224 0.224 0.224 0.224   
 
TOTAL a+b+c        
Commitments 0.224 0.224 0.224 0.224 0.224   
Payments 0.224 0.224 0.224 0.224 0.224   
2.4. Compatibility with financial progr amming and financial perspective 
[X] Proposal is compatible with  existing financial programming. 
 
EN 22   EN  Proposal will entail reprogramming of the relevant heading in the financial 
perspective. 
 Proposal may require application of th e provisions of th e Interinstitutional 
Agreement. 
2.5. Financial impact on revenue:16 
[X] Proposal has no financial implications  (involves technical aspects regarding 
implementation of a measure) 
OR  Proposal has financial impact – th e effect on revenue is as follows: 
n.a. 
3. BUDGET
 CHARACTERISTICS 
Type of expenditure New EFTA 
contribution Contributions 
from applicant 
countries Heading in 
financial 
perspective 
Non-comp Non-diff NO YES YES No [5] 
4. LEGAL  BASIS   
The action only concerns administrative expenditure. 
5. DESCRIPTION  AND  GROUNDS 
5.1. Need for Community intervention17 
5.1.1. Objectives pursued 
The present proposal for a regulation aims  to transpose Special Recommendation VII 
(SR VII) of the Financial Action Task For ce (the international body established by 
the Paris G7 summit in 1989 wh ich objective is to fight ag ainst financial crime) into 
Community law in a way that is fully compa tible with Internal Market principles. It 
lays down rules on payer’s information acco mpanying funds transf ers, in order to 
ensure that basic information is immediatel y available to the authorities responsible 
for combating money laundering and terrorism , to assist them in their task.  
5.1.2. Measures taken in connection with ex ante  evaluation  
In its Communication to the Council and the European Parliament concerning a 
“New legal framework for payments in th e Internal Market” (COM (2003) 718 final) 
                                                 
16 For further information, see separate explanatory note. 
17 For further information, see separate explanatory note. 
 
EN 23   EN the Commission consulted interested parties on issues raised by the transposition of 
SR VII into Community legislation.  
The results of the consultation have  shown overwhelming support from all 
stakeholders (the banking community, Ce ntral Banks, the European Central Bank 
and Member States) to transpose SR VII th rough Community legislation rather than 
national legislation. Payment systems in the EU  are in the process of being integrated 
into a Single Payment Area and, consequently , SR VII should be transposed in a 
harmonised manner throughout the EU. All st akeholders called for the use of a 
regulation, which would be the most e ffective way of guaranteeing uniform 
implementation and thus a level playing field. 
The results of the consultation are available at: http://europa.eu.int/comm/internal_market/payments/framework/2004-
contributions_en.htm . 
5.1.3. Measures taken following ex post  evaluation 
n.a. 
5.2. Action envisaged and budget intervention arrangements 
The rules on payer’s information accompanying funds transfers provided for in the 
proposal for a regulation result in a number of obligations applic able to all payment 
service providers (PSPs) invol ved in the payment chain. The payer’s payment service 
provider must ensure that funds transfers contain complete, accurate and meaningful 
payer’s information (name, address and acc ount number). Any in termediary payment 
service provider must ensure that all paye r’s information that accompanies a transfer 
is retained with the transfer or that appropriate records are kept. The payee’s 
payment service provider must have effec tive risk-based proce dures in order to 
identify funds transfers lacking complete  payer’s information and, as appropriate, 
report suspicious transacti ons to the authorities res ponsible for combating money 
laundering and terrorism. 
5.3. Methods of implementation 
The negotiation of the Regulation in the Counc il and in the Europ ean Parliament will 
be carried out by DG MARKT staff with in existing resources. Furthermore, 
Article 12 of the Regulation specifies th at the Commission will be assisted by a 
committee consisting of Member States’ repr esentatives on certain specific issues. 
6. FINANCIAL  IMPACT 
n.a. 
 
EN 24   EN 7. IMPACT  ON  STAFF  AND  ADMINISTRATIVE  EXPENDITURE 
Human and administrative resource require ments will be covered from within the 
budget allocated to the managing DG in th e framework of th e annual allocation 
procedure. 
7.1. Impact on human resources 
Staff to be assigned to 
management of the action using 
existing  Description of tasks deriving from the 
action 
Types of post 
Number of 
permanent 
posts Number of 
temporary 
posts Total 
 
Officials or 
temporary staff A 
  
B 
C 1 
  
 
0.5  1 
  
 
0.5 Negotiation of the Regulation in the 
Council and in the European 
Parliament and participation in FATF 
work 
Organisation of meetings of the 
regulatory Committee on the prevention 
of money laundering and terrorist 
financing 
Other human resources     
Total 1.5  1.5  
7.2. Overall financial impact of human resources 
Type of human resources Amount (€) Method of calculation *  
Officials 
Temporary staff EUR 162 000 
 EUR 108 000 x 1.5 
Other human resources 
(specify budget line)   
Total EUR 162 000  
The amounts are total expend iture for twelve months. 
7.3. Other administrative expenditu re deriving from the action 
Budget line 
(number and heading) Amount € Method of calculation 
Overall allocation (Title A7) 
Copy updated budget linesA0701 – Missions 
12 01 02 11 01 – Missions 12 01 02 11 02 – Meetings, conferences 
12 01 02 11 03 – Committees (consultative 
committee)
 
12 01 02 11 04 – Studies and consultations  
 
  
EUR 62 400 
(Regulatory Committee on the 
prevention of money 
laundering and 
terrorist financing)  
 
  
EUR 15 600 (reimbursement of 24 
experts) x 4 meetings 
 
EN 25   EN Information systems (A-5001/A-4300)  n.a.  
Other expenditure - Part A (specify) n.a.  
Total EUR 62 400  
The amounts are total expend iture for twelve months. 
Les besoins en ressources humaines et administ ratives seront couverts à l’intérieur de la 
dotation allouée à la DG gestionn aire dans le cadre de la pr océdure d’allocation annuelle. 
1 Specify the type of committee and the group to which it belongs. 
I. Annual total (7.2 + 7.3) 
II. Duration of action III. Total cost of action (I x II) EUR 224 400 
5 years EUR 1 122 000 
8. FOLLOW-UP  AND  EVALUATION 
8.1. Follow-up arrangements 
n.a 
8.2. Arrangements and schedule for the planned evaluation 
n.a 
9. ANTI-FRAUD  MEASURES 
n.a