Banks can’t keep up with the money
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Bankers are asking the Central Bank to postpone for a year the application of sanctions against credit institutions that will not be able to implement the B2B transfer service through the fast payment system (FPS) by April 1, 2024. They note that due to the instantaneous nature of the transfers, it is impossible to properly verify the recipient of the payment under anti-laundering laws. However, experts talk about another possible reason: due to the introduction of B2B transfers, banks will have to seriously rebuild their liquidity management system, taking into account the significant increase in the speed of movement of customer funds.
The Association of Banks of Russia (ADB) contacted the Central Bank with a proposal to “introduce a moratorium on the application of penalties to credit institutions” for failure to comply with the deadlines for introducing the B2B transfer service through SBP for a period of one year (Kommersant has read the letter). According to current rules, the service should be available to all banks with a universal license from April 1, 2024, but a survey conducted by the ADB “identified potential risks of its implementation.”
The main concerns of market participants are related to the instantaneous nature of transfers, which, in their opinion, creates additional risks due to the inability to quickly identify the recipient of the payment as part of anti-money laundering procedures. The ADB letter notes that banks will not have the opportunity to “refuse to execute a transfer to a high-risk client, including a person involved in the KYC Platform” (know your client.— “Kommersant”) due to lack of information about the recipient.” Also, the instantaneous nature of transfers through SBP will not allow for a five-day suspension of payment execution, as required by anti-money laundering laws, if the recipient is associated with terrorism or is on block lists.
To make a B2B transfer, both clients need to register with SBP – either in the mobile application or in their personal account for remote banking services. The payee generates (issues) an invoice in the form of a QR code or payment link and sends it to the payment sender. He follows the link, as a result of which a pre-filled payment order is generated, which he pays, and the funds go to the recipient’s account. The limit for such transfers is set at 1 million rubles. per transaction, with no restrictions on the number per day or month. The Central Bank does not yet limit the tariff for operations.
According to Kommersant’s sources in the banking market, some systemically important organizations are already “actively testing the mechanism.” Bankers still have questions about the service – for example, regarding the lack of a proven procedure for returning funds or the risk of violation of the order of payments.
Co-chairman of the ADB Committee on Payment Systems, Alexey Maslov, adds that “for small banks with a small number of clients using SBP, the main problem may be the high cost of services for the work of vendors, which will not pay off given their traffic.” It is difficult to replace a vendor, “since this entails significant financial and time costs, and also requires the restructuring of established processes,” the expert clarifies. At the same time, the Central Bank has the right to limit the maximum cost of services for clients (senders and recipients of SBP transfers), which in some cases does not allow it to be set taking into account the costs actually incurred by the bank for the implementation and maintenance of the service.
The Bank of Russia told Kommersant that it had received a letter from the Association of Banks of Russia and would consider it in due course. At the same time, they noted that the date of mandatory support for this scenario for banks was determined taking into account the deadlines for finalization required by banks.
Experts believe that bankers’ doubts about the service’s prospects may have even deeper roots. Thus, according to the head of the board of the Financial Innovations association, Roman Prokhorov, the problem is “that with the introduction of B2B transfers through SBP, banks will have to rebuild the entire liquidity management system, because now the funds of legal entity clients will be able to quickly move to another bank.” The basic responsibility, the expert clarifies, always lies with the recipient’s bank: it is the bank that is obliged to check its client and block his account if necessary. According to Mr. Prokhorov, the new service will be most in demand among small and medium-sized businesses, where, for example, goods are shipped upon receipt of payment.
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