Dal Sahota
Against a backdrop of surging fraud, the Financial Action Task Force (FATF) is introducing new safeguards to protect the global financial system. The changes raise the bar for both financial institutions and corporates. Are you ready?
- FATF Recommendation 16 update (June 2025) strengthens transparency for domestic and cross-border payments to combat APP fraud.
- Collaboration, technology, and trusted data are essential to detect, prevent, and respond to evolving fraud tactics.
Financial fraud continues to surge and is now a global phenomenon. Of particular concern is Authorised Push Payment (APP) fraud, which is steadily advancing – estimated global losses are expected to exceed US$330bn by 2027.
The sheer scale of this growing challenge means that a multi-dimensional response is needed.
Our white paper analyses this type of fraud, focusing on the nature of this rapidly evolving threat, and detailing how APP scams rely on trickery to confuse victims into authorising payments, a tactic that makes this type of fraud highly challenging to prevent. It also unpacks cross-border payments and related risk, cautioning that fraudsters can quickly move stolen funds across multiple accounts and jurisdictions, leveraging real-time payment systems that leave little time for banks to identify and block fraudulent transactions.
As APP and other types of fraud continue to surge globally, FATF is introducing new, vital safeguards to protect international payments.
Stronger safeguards
The June 2025 update to FATF Recommendation 16 introduces stronger safeguards to protect customers in a digital era in which risks are evolving.
The update is a welcome step that has been designed to protect the global financial ecosystem – but it also entails more obligations for both financial service providers and corporates.
Financial service providers will need to collect more detailed transaction information and corporates handling international payments, including payroll and supplier transactions, may need to adapt to new data-sharing and verification standards to avoid delays, compliance issues and reputational risks.
Unpacking FATF Recommendation 16
FATF Recommendation 16 focuses on strengthening payment transparency to combat money laundering and terrorist financing.
It introduces stricter rules applied to a wider range of payment types, including wallet-based and alternative remittance methods, with a key area of change being the requirement for more accurate, complete and structured information on the originators and beneficiaries of domestic and cross-border wire transfers. Nevertheless, the FATF aims to keep its standards technology-neutral while adhering to the principle of "same activity, same risk, same rules".
The new rules will come into effect by the end of 2030 and are designed to:
- Provide clarity around who is sending and receiving money – FATF requires verification tools and the use of new technologies to prevent fraud and error (for example, recipient account validation) and clear responsibility allocation in the payment chain
- Ensure consistency of information in payment messages to provide for more detailed originator and beneficiary information (for example, name, address and date of birth)
- Apply to peer-to-peer cross-border payments over US$/EUR 1,000
It is also worth noting that, at the time of publishing this blog, there remain some exemptions, which cover any transaction carried out using a credit, debit, or prepaid card for the purchase of goods or services, and with some scope of definition needed for the “purchase of goods and services”. To support implementation, FATF has allowed a phased implementation, will set up a public-private forum (the Payment Advisory Group) and will issue guidance in 2026.
What to do now
As you begin to prepare for the FATF Recommendation 16 changes, here are 3 critical areas to keep top-of-mind:
- Evolving regulations
Always remain mindful of your obligations in an evolving regulatory environment. FATF Recommendation 16 draws attention to the vital role of the need for institutions to verify who they pay before they pay, but there are other regulatory changes happening.
- Data and technology
Market participants will need to scale with data and technology to fight back against APP fraud. Reliable access to trusted data is essential – the right data, available at the right time, and shared widely amongst market participants (but always within the confines of data privacy requirements) can be game changing.
- Collaboration
A collaborative approach syncs the collective response across many market participants, both public and private. There is strength in numbers, and it is important to stress that no single actor working in isolation can effectively fight APP fraud alone.
In addition, adopting an “always-on” mindset is crucial – the importance of continuous monitoring in the fight against fraud cannot be over-estimated.
LSEG can help you prepare for the changes
Secondary identification information can significantly reduce false positives in screening. World-Check offers an auto resolution matching function that leverages this information to streamline daily operations.
Our Global Account Verification solution helps verify both individual and business account details via API and the web portal, in real time.
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