ABA Letter to FATF re: R.16 Revision Proposal

Dear President Kumar:

The American Bankers Association appreciates the opportunity to provide an initial, and preliminary, written response to the request for consultation by the Financial Action Task Force (FATF) regarding potential revisions to Recommendation 16 (R.16), its Interpretive Note (INR.16), and the related Glossary of specific terms. FATF is contemplating potential changes to R.16 in part to address developments in payments and messaging standards since the standard was initially adopted in 2012.

In light of the rapidly evolving changes in payment forms over the twelve years since R.16 was adopted, as well as the new methods by which criminals and terrorists attempt to move currency and transfer value (e.g. using convertible virtual currency), ABA supports FATF’s reconsideration of R.16. However, that support comes with caveats. ABA believes our concerns, as well as those expressed by expert industry groups and other critical stakeholders must first be addressed, before any revisions are made. Given the complexity of expanding R.16 requirements to other payment methods such as ACH, immediate payments, and payment cards across a number of jurisdictions where compliance schemes vary —even in light of FATF’s acknowledgement that this is merely "the first step in a wider consultation process, which will also include further discussion and engagement" — ABA recommends extending the current comment deadline to ensure sufficient time for commenters to provide thoughtful input aimed at ensuring FATF decision-making is informed by the technical and operational expertise necessary to avoid the potential for unintended consequences.

ABA is concerned about the broad proposed expansion of R.16 without a fulsome discussion with experts in both the public and private sectors of the illicit finance risk presented by money launderers, criminals, and terrorists seeking to misuse different forms of payments and value transfers. FATF is contemplating changes that would dramatically expand the recommendation to apply to many, but not all, domestic and cross-border "payments or value transfers." ABA believes revisions to R.16 should only be made after identifying the most efficient and effective ways to address potential risks. FATF must take into account both the effectiveness of the proposed changes, as well as the relative costs that may be imposed on the financial institutions that facilitate faster, cheaper, more transparent and inclusive payments.

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