G20 Under Criticism over Plan To Increase Speed In Cross-Border Payments
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Several reports have said that a plan by G20 countries to increase the speed of international payments will promote financial crime and enforce sanctions against Russia and other states.
The Future of Financial Intelligence Sharing noted that the increased efforts to promote the efficiency of digital payment systems by 2027 fail to consider the increased vulnerability to criminal networks and the likelihood of transactions being used for money laundering.
G20’s Plan for Efficient Cross-Border Payments Will Increase Fraud and Money Laundering
The head of FFIS, Nick Maxwell, opined that one of the major failures of G20 countries was a lack of responsibility among policymakers exploring reforms. These parties needed to consider the steps to prevent fraud and financial crimes.
The report urges players in the public and private sectors to collaborate in formulating robust systems for preventing financial fraud. There was also a growing need to use national data to identify money laundering networks.
Maxwell also said that failing to address these concerns will have far-reaching effects on the safety of consumers and law enforcement entities.
The Bank of England predicted that the value of cross-border payments, including wholesale ones between financial firms, remittances, and retailers, will reach $250 trillion by 2027 compared to $150 trillion a decade earlier.
The G20 plans to bring efficiency to this market to make global payments cheap, fast, and transparent by 2027. It also plans to set basic standards to improve the settlement infrastructure and ensure regulators, supervisors, and lawmakers will address the regulatory issues in the sector.
Addressing the Increased Risk of Cross-Border Fraud
The plan says cross-border payments are usually processed within hours or days and might be settled quickly. This fast process limits the time counterparties must comply and halt suspicious payments.
The plan announced by the G20 countries does not address how transactions will comply with sanctions in real-time. Sanctions have been a major point of concern since the West imposed sanctions against Russia following the war with Ukraine. Financial firms operating in Russia have been affected greatly by these limitations.
These sanctions have barred many executives from using Western financial systems, while some Western firms are no longer allowed to import various Russian commodities.
The G20’s plan will promote the power of payment analytics by supporting the detection of economic crimes. At the same time, its success will depend upon the willingness to fight fraud, financial crimes, and payment issues.
