The Financial Stability Board (FSB) has released its finalized recommendations aimed at improving data frameworks related to cross-border payments and ensuring consistent regulation and supervision of payment service providers. These recommendations are part of the FSB's efforts under the G20 cross-border payments roadmap, which seeks to address legal, supervisory, and regulatory issues in this area.
"The transfer of data across borders is essential to the functioning of cross-border payments," states the FSB. The organization highlights that current frictions in data frameworks pose challenges to enhancing cost, speed, transparency, and accessibility. The recommendations target these frictions while maintaining safety and security in cross-border payments.
To implement these recommendations effectively, the FSB is establishing a Forum on Cross-Border Payments Data. This forum will include public-sector stakeholders from various fields such as anti-money laundering, countering terrorism financing, sanctions, and data privacy. A private sector advisory group will also be formed within this forum.
The FSB emphasizes that technological advances have increased the variety of payment services providers (PSPs). However, without comprehensive international standards for non-bank PSPs offering cross-border services, jurisdictions have adopted different regulatory approaches. The new recommendations aim for quality and consistency in regulating both banks and non-banks proportionate to their risk levels.
These measures are intended to prevent regulatory arbitrage by creating a level playing field for all PSPs regardless of their business models or risk profiles. "Greater consistency in the regulation and supervision...can foster lower costs, higher delivery speed, and better financial access," according to the FSB.
The reports reflect feedback from public consultations held earlier this year. Enhancing cross-border payments has been a priority for the G20 since 2020 when they coordinated with other international bodies to develop a Roadmap addressing these challenges.
Klaas Knot chairs the FSB which coordinates global financial stability efforts among national authorities across 24 countries as well as various international organizations. The Secretariat operates out of Basel under the Bank for International Settlements' hosting.