Objective of Recommendation 16

Recommendation 16 of the FATF requires that all wire transfers—both domestic and cross-border—are traceable through the inclusion of specific originator and beneficiary information. This measure is intended to prevent terrorists and criminals from exploiting wire transfer systems and to ensure competent authorities have access to reliable information for investigations.

Requirements for Ordering Financial Institutions

Ordering financial institutions must ensure that:

• Cross-border wire transfers of USD/EUR 1,000 or more are accompanied by:

  • Name and account number (or unique transaction reference) of the originator and beneficiary.

  • Originator’s address, national ID number, customer ID number, or date and place of birth.

• Batch transfers must include full originator and beneficiary details in the batch file, traceable within the beneficiary country.

• Transfers below the de minimis threshold must still include originator and beneficiary names and account/reference numbers, even if not verified unless suspicion of ML/TF arises.

• Domestic wire transfers must also include originator information or a unique reference number, unless equivalent access is available to competent authorities within three business days.

• Failure to comply with the above requirements must result in non-execution of the transfer.

Requirements for Intermediary Financial Institutions

Intermediary institutions must:

• Retain all received originator and beneficiary information.

• Keep records of this data for at least five years if technical limitations prevent its automatic transmission.

• Identify and act upon wire transfers lacking the required data using risk-based policies, including potential rejection or suspension of the transfer.

Requirements for Beneficiary Financial Institutions

Beneficiary institutions must:

• Take reasonable measures, including post- or real-time monitoring, to detect missing information.

• Verify the identity of beneficiaries for cross-border wire transfers of USD/EUR 1,000 or more if not previously verified.

• Implement risk-based procedures for handling incomplete transfers, including possible rejection or further inquiries.

Money or Value Transfer Services (MVTS)

MVTS providers must:

• Comply with all aspects of Recommendation 16 in every jurisdiction where they operate.

• When controlling both ends of a transaction, consolidate information from both sides to evaluate for suspicious activity and, where appropriate, file a Suspicious Transaction Report (STR) in each affected jurisdiction.

Targeted Financial Sanctions

Countries must ensure:

• Freezing and prohibition actions apply to wire transfers in accordance with UNSCRs (e.g., 1267 and 1373).

• Institutions take immediate action against transactions involving designated individuals or entities.
  

Purpose & Risk Alignment

Recommendation 16 supports broader AML/CFT efforts by:

• Eliminating anonymity in wire transfers.

• Providing competent authorities with access to verified, useful data.

• Facilitating investigations and the application of sanctions.

This mechanism is crucial for national and international financial security and complements FATF’s emphasis on effective risk-based compliance systems.