How to Validate Payee Information in a Payment

Why It Matters

Verifying complete and accurate payee (recipient) information is essential to ensuring payment traceability, as required under FATF Recommendation 16 and Regulation (EU) 2015/847. Payments missing key payee details can violate legal obligations, obstruct sanctions screening, or result in payment rejection by downstream institutions.

What You Need to Validate

Before executing a payment, the following payee information must be included:

Full Name of the payee
Account Number (or a unique transaction identifier if no account exists)

These two elements are required regardless of the payment value or risk level. Unlike payer data, no additional identifiers (e.g. address or document number) are required under standard EU rules—but consistency and accuracy remain critical.

Note: If a simplified regime applies under local legislation, ensure you follow jurisdiction-specific guidance on what data may be omitted.

What if Additional Payee Information Is Provided?

If the payment message includes extra details beyond the required name and account number (such as a payee address or identification number), these must still comply with the requirements of Regulation (EU) 2015/847 and FATF R.16. Even though this information is not mandatory, if it is included, it must be accurate, complete, and capable of supporting sanctions screening and payment traceability. Incorrect or inconsistent additional data can lead to downstream issues, including screening errors or rejection by receiving institutions.

Step-by-Step Validation Process

Red Flags to Watch For

Incomplete or abbreviated payee names
Incorrect, missing, or generic account numbers
Transactions routed through outdated systems that don’t support structured fields
Repeated exceptions involving the same beneficiary

When to Escalate

If payee data is missing or appears unreliable:

Suspend or reject the payment depending on your institution’s risk policy
Query the sending institution or internal team for correction
Notify compliance if repeated or high-risk issues arise

Summary

Validating payee information is a simple but non-negotiable requirement under wire transfer regulations. Ensuring that names and account numbers are complete and accurate not only fulfils your legal duty; it ensures payments flow efficiently and reduces reputational and operational risk.