The payments landscape has evolved significantly with the rise of non-bank PSPs, driven by a focus on consumer experience, speed, and cost efficiency. Non-bank PSPs rely heavily on financial institutions for accounts and direct participation in payment market infrastructures, facilitating payments through local payment networks, net settlement, and bundled or bulk transactions, including cross-border transactions. The high levels of intermediation between the originator and the beneficiary increase the challenges for the intermediary financial institutions in monitoring and screening, complicating the financial institution’s ability to understand and manage the financial crime risks associated with non-bank PSP relationships.

The ongoing challenges in finding international alignment in financial crime regulations and licensing requirements in the non-bank PSP sector further hinder financial institutions’ efforts to maintain a common set of financial crime compliance and risk management standards across jurisdictions.

To support the industry in navigating this changing landscape, the Wolfsberg Group publishes today its new Guidance on the Provision of Banking Services to non-bank Payment Service Providers. The guidance provides a practical, risk-based framework to help banks understand, assess and manage the financial crime risks associated with providing banking services to non-bank PSPs while continuing to support innovation in payments. It expands on existing Wolfsberg Group guidance by detailing common relationship types, associated risks, compliance obligations and risk management expectations for financial institutions providing services to non-bank PSPs.

The principles underlying this guidance emphasise:

• The risk-based approach: financial institutions should apply a risk-based approach to managing financial crime risks associated with non-bank PSP relationships, tailoring due diligence and monitoring to the specific risks presented by different non-bank PSP activities.

• Payment transparency: non-bank PSPs, particularly the debtor agent PSP (the originating entity), have a primary obligation to ensure payment messages contain complete and accurate information to comply with FATF Recommendation 16 and local regulations. Intermediary PSPs are crucial in maintaining transparency by controlling and transmitting information without alteration and monitoring for incomplete details, as required by local laws and regulations.

• Comprehensive risk management: financial institutions should have a thorough understanding of a non-bank PSP's business model, customer activities, and the financial crime controls in place to effectively manage associated risks.

The continued, rapid growth of non-bank payment service providers is reshaping the global payments landscape and creating new opportunities for consumers and businesses alike. At the same time, it introduces greater complexity for banks responsible for managing financial crime risk across increasingly interconnected payment chains. This guidance reflects the Wolfsberg Group’s commitment to supporting innovation through practical, risk-based principles that help financial institutions make informed decisions while maintaining the integrity of the financial system.

J. Edward Conway, Executive Secretary, Wolfsberg Group

You can access the guidance here.