United Kingdom

The Payment Services Regulations 2017 were made under various provisions of UK financial legislation, including the Financial Services and Markets Act 2000, to implement the second EU Payment Services Directive (PSD2). They aim to provide a comprehensive regulatory framework for payment services in the United Kingdom. Although the document itself does not explicitly reference the FATF Travel Rule, it includes integrated provisions that support compliance with similar requirements on traceability, customer due diligence, and the secure transmission of payment information.

Scope & Applicability

The Regulations apply to payment service providers operating in the United Kingdom, including authorised payment institutions, small payment institutions, electronic money institutions, and account information service providers. It also applies to their agents and other designated entities. It lays out the conditions under which such institutions may be authorised or registered by the Financial Conduct Authority (FCA), including extensive provisions for safeguarding customer funds, record keeping, and auditing.

Identity & Registration Requirements

Part 2 of the Regulations mandates that all entities offering payment services must be either authorised or registered by the FCA and listed in a public register. Applicants must satisfy conditions concerning governance, capital requirements, risk management, and the safeguarding of customer funds. These requirements ensure the legitimacy of both the payer and the payee, thereby providing a solid foundation for the traceability objectives of the WTR.

Information & Record Keeping Duties

Payment service providers are required to maintain complete and accurate records related to all services offered, including customer identity, account information, and payment transaction details. These records must be retained for at least five years and must be sufficient to allow the FCA to supervise compliance effectively. This obligation supports WTR compliance by ensuring a reliable audit trail for all transactions.

Safeguarding of Funds

The Regulations require that customer funds received for payment execution be held separately from the institution’s own funds. Institutions must safeguard these funds either by segregation in a designated account or through insurance or comparable guarantees. In the event of insolvency, the safeguarded funds are to be distributed in priority to all other creditors. This arrangement protects end users and supports the integrity of payment flows, in line with FATF expectations for secure financial transfers.

Operational Risk & Fraud Prevention

Institutions are mandated to implement strong internal controls and robust governance mechanisms, including operational security and fraud detection systems. These safeguards are necessary for ensuring that wire transfers are not used to facilitate illicit activity and that suspicious patterns can be identified and reported effectively.

Regulatory Supervision & Enforcement

The FCA is empowered to impose, vary, or revoke authorisations, issue guidance, conduct audits, and enforce sanctions where non-compliance is identified. The Regulations also allow for information sharing between supervisory bodies and international cooperation, which is essential for monitoring cross-border wire transfers and ensuring consistency in enforcement.

Provision of Services Through Agents

Payment institutions may only provide services through registered agents. The agent registration process includes vetting for financial crime risk and fit-and-proper assessments. These controls ensure that all actors in the wire transfer chain meet regulatory standards, thereby bolstering WTR effectiveness.

Insolvency & Contingency Provisions

The Regulations contain special measures for the treatment of customer funds during insolvency. Provisions on payment institution special administration apply to protect users of payment services and to ensure that payment operations can continue or wind down in an orderly manner. These rules maintain continuity in compliance and support systemic integrity in the context of fund transfers.

Conclusion: WTR Compliance Integration

The Payment Services Regulations 2017 embed many of the operational and compliance standards necessary for effective implementation of Wire Transfer Regulation, particularly those aligned with FATF Recommendation 16. By imposing strict obligations on registration, due diligence, record keeping, and safeguarding, and by mandating supervisory oversight, the Regulations provide the legal and procedural infrastructure required to ensure traceable, transparent, and secure payment flows within and across UK borders. While the Travel Rule is not named, its principles are embedded throughout, reinforcing the UK’s commitment to financial crime prevention in the payment services sector.