Why Europe Must End Its 30-Year Digital Winter to Ensure Its Long-Run Future

Payments Experts: G20 Faster Payments Goals Could Foster Financial Crime

Will the G20’s campaign for faster payments have unintended negative consequences?

A new report by the U.K.’s Future of Financial Intelligence Sharing (FFIS) said plans to make digital payment systems faster by 2027 ignore the risk of heightened vulnerability to financial crime and money laundering. 

As PYMNTS has written, the G20 nations have goals for cross-border payments around speed, transparency, cost and access, with that group targeting 75% of cross-border payments to be credited to their beneficiaries within an hour by 2027.

“A key institutional failure at the G20 level is the lack of responsibility among payments reform policymakers to consider fraud prevention and financial crime security,” Nick Maxwell, head of FFIS, told the Financial Times on Sunday (Jan. 7), the same day the report was published.

The report calls for greater collaboration between the private and public sector to make sure financial crime prevention measures are hardwired into cross-border payment systems.

Failing to deal with these issues could have “wide-ranging negative impacts [for] consumer financial safety, law enforcement effectiveness against organized crime and national security in terms of sanctions implementation,” Maxwell said.

As PYMNTS wrote last week, advanced technologies like artificial intelligence (AI) can provide an important defense against fraud in cross-border transactions.

“By leveraging machine learning algorithms and AI, financial institutions intermediating global payment flows can provide their users with insights into currency fluctuations, market trends and potential risks, empowering them to make informed decisions and optimize their financial strategies,” that report said.

Gayathri Vasudev, global head of cross-currency payments at J.P. Morgan Payments, said in an interview with PYMNTS that working machine learning and AI into every facet of payment processing, such tasks like automating repairs, eliminating false positives on sanctions and ongoing monitoring, can allow for a seamless payment flow. 

When combined with the use of APIs to provide real-time foreign exchange rates and payment tracking, these advancements have “the potential to completely transform cross-border payments,” she said. 

Meanwhile, recent PYMNTS Intelligence research has found that just 23% of smaller businesses would rate their cross-border payment solutions as “very or extremely satisfactory.”

“Part of the reason is that the need for correspondent banking relationships, as well as the long settlement times, inherently locks up much-needed working capital,” PYMNTS wrote. “If businesses don’t have a cash cushion to work with, they are effectively shut out of international expansion.”