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Wednesday, June 11, 2025
AML Requirements and Practices for Payment Processors
As the industry of payment processors grows, so do concerns about anti-money laundering (AML) requirements, or the risk of transaction laundering.
However, there are ways to protect your company from shady practices such as money laundering, fraud, and other financial crimes.
For example, transaction laundering proves that even legitimate merchants can unwittingly process fraudulently intended payments on behalf of third parties.
So let’s start with the basics to better understand what to do.
In essence, payment processors are a key factor in the security and handling of payment data between the merchants using them and the respective financial institution.
The payment gateway sends data about the user’s debit or credit card information to the payment processor, who cross-checks the data within the bank or card network for authorization.
If this authorization is granted, the payment processor will then notify the user’s institution and give the green light to wire the funds to the merchant’s account.
Of course, with countless payment services and payment gateways, it is inevitable that regulations will differ depending on which service you use.
As such, it is important for businesses to review the regulations regarding payment services to ensure proper compliance with payment procedures and licenses.
What are the US AML requirements for payment processors?
of Federal Financial Institutions Examination Council (FFIEC) states that payment processors pose a greater risk of fraud and money laundering if they do not effectively verify the identities of their merchant clients and their respective business practices.
However, with that in mind, there are still no AML requirements for processors derived from the BSA (Bank Secrecy Act).
Nonetheless, the increased risk is very real for payment processors who ignore AML requirements and end up doing the necessary due diligence, making banks increasingly reluctant to do business with them. .
Increased focus on regulation by US financial institutions will lead PSPs to move to a sustainable operating model to tackle fraud.
Payment service providers are fully expected to implement efficient control mechanisms to prevent financial crime. This means that business models and internal operations will definitely be affected.
Finally, Enabler method Payment processors operating in the United States are required to reflect compliance best practices for regulated financial institutions.
What are the EU AML requirements for payment processors?
The European Union simplifies compliance as it enforces two simple AML directives that payment services operate under.
Sixth AML Directive (commonly referred to as 6AMLD), which advances what 5AMLD previously proposed.
Payment Services Directive 2 (or PSD2) promotes stronger customer authentication and adds the possibility to use two different payment services: Account Information Service (AIS) and Payment Initiation Service (PIS).
What are Canada’s AML requirements for payment processors?
In Canada, FINTRAC (The Financial Transactions and Reports Analysis Center of Canada) regulates payment processors as foreign money services or money services businesses.
This means that PSPs must comply with national wire transfer obligations.
How are companies implementing robust AML practices?
There are many ways companies can improve their anti-money laundering practices. Here are three of the most important:
1. Designate a compliance officer, facilitate AML training, and automate where necessary
2. Adhere to a constant review mindset: Screening for sanctions, searching for suspicious account activity, assessing merchant risk, monitoring transactions, and more, your business needs to be on the lookout. Many of these processes can have fully automated workflows.
3. Create policies: Improve your customer onboarding process and adhere to KYC best practices. Practicing AML compliance is not limited to preventing illegal activity, it also helps with onboarding and controlling costs. Achieving a balance between the onboarding process and maintaining security is certainly possible.
Summary: What Do AML Practices Accomplish?
Achieving best AML compliance practices will help your business in the long run as it adds stability to your day-to-day operations while correlating processes that are auditable by business partners and regulators.
Additionally, it extends and protects your organization by preventing loss.
So everything runs smoothly with the payment processing solutions industry Ready for huge annual growth rateAML compliance has become essential.
As the industry of payment processors grows, so do concerns about anti-money laundering (AML) requirements, or the risk of transaction laundering.
However, there are ways to protect your company from shady practices such as money laundering, fraud, and other financial crimes.
For example, transaction laundering proves that even legitimate merchants can unwittingly process fraudulently intended payments on behalf of third parties.
So let’s start with the basics to better understand what to do.
In essence, payment processors are a key factor in the security and handling of payment data between the merchants using them and the respective financial institution.
The payment gateway sends data about the user’s debit or credit card information to the payment processor, who cross-checks the data within the bank or card network for authorization.
If this authorization is granted, the payment processor will then notify the user’s institution and give the green light to wire the funds to the merchant’s account.
Of course, with countless payment services and payment gateways, it is inevitable that regulations will differ depending on which service you use.
As such, it is important for businesses to review the regulations regarding payment services to ensure proper compliance with payment procedures and licenses.
What are the US AML requirements for payment processors?
of Federal Financial Institutions Examination Council (FFIEC) states that payment processors pose a greater risk of fraud and money laundering if they do not effectively verify the identities of their merchant clients and their respective business practices.
However, with that in mind, there are still no AML requirements for processors derived from the BSA (Bank Secrecy Act).
Nonetheless, the increased risk is very real for payment processors who ignore AML requirements and end up doing the necessary due diligence, making banks increasingly reluctant to do business with them. .
Increased focus on regulation by US financial institutions will lead PSPs to move to a sustainable operating model to tackle fraud.
Payment service providers are fully expected to implement efficient control mechanisms to prevent financial crime. This means that business models and internal operations will definitely be affected.
Finally, Enabler method Payment processors operating in the United States are required to reflect compliance best practices for regulated financial institutions.
What are the EU AML requirements for payment processors?
The European Union simplifies compliance as it enforces two simple AML directives that payment services operate under.
Sixth AML Directive (commonly referred to as 6AMLD), which advances what 5AMLD previously proposed.
Payment Services Directive 2 (or PSD2) promotes stronger customer authentication and adds the possibility to use two different payment services: Account Information Service (AIS) and Payment Initiation Service (PIS).
What are Canada’s AML requirements for payment processors?
In Canada, FINTRAC (The Financial Transactions and Reports Analysis Center of Canada) regulates payment processors as foreign money services or money services businesses.
This means that PSPs must comply with national wire transfer obligations.
How are companies implementing robust AML practices?
There are many ways companies can improve their anti-money laundering practices. Here are three of the most important:
1. Designate a compliance officer, facilitate AML training, and automate where necessary
2. Adhere to a constant review mindset: Screening for sanctions, searching for suspicious account activity, assessing merchant risk, monitoring transactions, and more, your business needs to be on the lookout. Many of these processes can have fully automated workflows.
3. Create policies: Improve your customer onboarding process and adhere to KYC best practices. Practicing AML compliance is not limited to preventing illegal activity, it also helps with onboarding and controlling costs. Achieving a balance between the onboarding process and maintaining security is certainly possible.
Summary: What Do AML Practices Accomplish?
Achieving best AML compliance practices will help your business in the long run as it adds stability to your day-to-day operations while correlating processes that are auditable by business partners and regulators.
Additionally, it extends and protects your organization by preventing loss.
So everything goes smoothly and together with the payment processing solutions industry Ready for huge annual growth rateAML compliance has become essential.
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