Purpose & Scope

Recommendation 16 (R.16) in the 2013 FATF methodology mandates the traceability of wire transfers. Its objective is to ensure that such transactions are not used anonymously by money launderers or terrorist financiers. All transfers, domestic or cross-border, must include sufficient and reliable data on both the originator and the beneficiary to support law enforcement and financial intelligence efforts.

Requirements for Ordering Financial Institutions

Ordering financial institutions must ensure that:

• Cross-border wire transfers of USD/EUR 1,000 or more are always accompanied by the following verified information:

  • Originator’s name, account number (or transaction reference), and either address, national ID, customer ID, or date/place of birth.

  • Beneficiary’s name and account number (or reference).

• Batch file transfers must include full traceable details of all parties involved, available within the beneficiary country.

• Transfers below the de minimis threshold must still include names and reference numbers for both parties. Verification is not mandatory unless suspicious activity is suspected.

• Domestic transfers must include at least the account number or transaction reference that enables authorities to trace the originator and beneficiary if required.

• Transfers lacking required data must not be executed.

Requirements for Intermediary Financial Institutions

Intermediaries must:

• Retain all originator and beneficiary data received.

• Keep a record of the data for at least five years if technical limitations prevent automatic transmission.

• Use risk-based policies to decide on rejecting or suspending transfers that lack required data and determine appropriate follow-up actions.

Requirements for Beneficiary Financial Institutions

For cross-border transfers of USD/EUR 1,000 or more, beneficiary institutions must:

• Take reasonable steps (e.g., post-event or real-time monitoring) to identify transfers lacking required information.

• Verify the identity of beneficiaries if not already verified.

• Maintain data per Recommendation 11.

• Implement risk-based policies for handling incomplete transfers.

MVTS Provider Responsibilities

Money or Value Transfer Services (MVTS) must:

• Follow R.16 in every jurisdiction they operate in.

• If they control both the sending and receiving aspects of a transaction, they must assess for suspicious activity and file Suspicious Transaction Reports (STRs) in relevant jurisdictions.

Link to Targeted Financial Sanctions

Countries must ensure that financial institutions processing wire transfers comply with targeted financial sanctions under relevant UN Security Council Resolutions (e.g., UNSCR 1267, 1373), including freezing assets and blocking transactions linked to designated individuals or entities.

Core Compliance Objectives

R.16 is pivotal in ensuring transparency in wire transfers. By mandating traceable and verified data transmission, it aids in disrupting criminal and terrorist financial flows, and reinforces global AML/CFT safeguards. This recommendation also intersects with requirements under Recommendations 6, 10, 11, and 20.