United Kingdom

Following the UK's exit from the EU, the EU’s Funds Transfer Regulation (FTR), originally aligned with FATF Recommendation 16, was onshored through the Money Laundering, Terrorist Financing & Transfer of Funds (Information on the Payer) Regulations 2017. UK Finance issued this voluntary 'How To' guide to help financial institutions and payment service providers (PSPs) interpret and operationalise these rules effectively. The goal is to improve compliance while supporting straight-through processing and reducing false positives in transaction monitoring.

Scope of the Regulation

The FTR applies to all transfers of funds involving a UK-based PSP, including non-bank PSPs and non-bank financial institutions. It does not apply to certain activities such as securities transactions, intra-UK consumer purchases below EUR 1,000, or when funds are transmitted using devices solely for goods or services payments, although person-to-person transfers remain in scope.

Operational Clarifications & Industry Practice

The guidance clarifies that all transfers, irrespective of the payment channel, must carry complete and traceable payer and payee information. PSPs are encouraged to include verified legal names, full postal addresses, and structured data formats compatible with SWIFT or ISO20022 standards. The use of Unique Transaction Identifiers (UTIs) is discussed in the context of technical limitations, with firms advised to ensure these remain meaningful and traceable.

Treatment of Non-Bank PSPs & Virtual Accounts

The document addresses challenges with virtual accounts, particularly for non-bank PSPs that rely on correspondent banks to process payments. It provides case studies to illustrate how firms should reflect the payer and account information in message fields to ensure transparency. Where non-bank PSPs serve as intermediaries, the actual client (payer) must still be clearly represented in transaction metadata.

Real-Time & Post-Event Monitoring

PSPs must implement risk-based monitoring procedures to detect missing or meaningless data in transactions. While real-time monitoring is not mandatory for all transfers, it is expected for high-risk payments or when working with counterparties known to be repeatedly non-compliant. Firms should maintain clear procedures for escalating issues and verifying customer information using reliable and independent sources.

Exemptions & Interpretation Challenges

While exemptions exist for low-value and intra-UK transfers, the guidance encourages firms not to rely on them excessively. Firms choosing to invoke exemptions are advised to make this transparent to other PSPs in the payment chain and be prepared to respond quickly to queries. The lack of market standardisation around exemptions is acknowledged, and firms are encouraged to collaborate to reduce friction.

Handling Missing Information & Repeated Failures

Firms receiving payments with incomplete data must decide whether to reject, suspend, or process the payment using a risk-sensitive approach. If a sending PSP repeatedly fails to provide compliant information, firms are expected to escalate the issue, issue warnings, and potentially restrict or terminate the relationship. The guidance outlines both quantitative and qualitative factors for defining a repeatedly failing PSP.

Batch Transfers & Intermediary PSP Obligations

In cases involving batch file transfers, all underlying payment data must be retained and accessible. Intermediary PSPs are responsible for ensuring the full set of payer and payee data accompanies the transfer and must also monitor for data gaps. Where information must be truncated due to system limitations, alternative mechanisms such as retrievable referencing should be in place.

Risk Assessment & Suspicious Activity Reporting

Firms must treat missing or incomplete data as a risk factor in their wider anti-money laundering (AML) frameworks and consider reporting to the Financial Intelligence Unit (FIU) if patterns suggest suspicious activity. Guidance is provided on how firms should make such assessments, factoring in the severity and frequency of non-compliance by upstream PSPs.

Conclusion: WTR Compliance Integration

The UK Finance interpretative guidance provides a detailed operational blueprint for meeting the UK’s Wire Transfer Regulation obligations. It promotes transparency, consistency, and proportionality, supporting a risk-based approach that balances regulatory compliance with efficient payment processing. The guidance underscores the importance of collaboration, documentation, and system design in mitigating financial crime risks in cross-border payments.