FSB identifies frictions from data frameworks that pose challenges to enhancing cross-border payments

The FSB has released a stocktake report assessing international data standards relevant to cross-border payments. This initiative aligns with the G20 Cross-border Payments Roadmap’s goal of improving the interaction between data frameworks and cross-border payments.
The report underscores the importance of data transfer across borders for the functioning of cross-border payment systems and highlights various data frameworks, encompassing legal, regulatory, and technical aspects governing cross-border payments. These frameworks dictate conditions for data transfer, storage, security, accompanying international payments, and technical standards to ensure interoperability.
The G20 Cross-border Payments Roadmap, endorsed by G20 Leaders, aims to address challenges in cross-border payments, including cost, speed, access, and transparency. The FSB’s stocktake identifies issues related to cross-border data use by national authorities and the private sector. It will inform priority actions for cross-border data exchange and standard messaging formats.
The stocktake reveals several frictions stemming from data frameworks, including fragmentation, uncertainty among payment providers, data localization measures, and barriers to innovation. While some friction is necessary for security and regulatory compliance, excessive fragmentation increases costs and hinders automation.
To mitigate these challenges, the FSB proposes five strategies: aligning AML/CFT data requirements, promoting cooperation in data privacy, fostering technical standards alignment, assessing the impact of data frameworks on future developments, and seeking broader interoperability.
Several actions are already underway, including developing recommendations for alignment and interoperability, harmonizing ISO 20022 messaging standards, and enhancing FATF Recommendation 16. The FSB recognizes the need for coordinated efforts among financial and non-financial authorities to address these frictions. Suggestions for improvements are under consideration, with a focus on aligning frameworks to achieve Roadmap goals.
The next phase of the FSB’s work involves identifying recommendations through stakeholder engagement and public consultation, addressing impediments found in the stocktake, and coordinating efforts with other Roadmap initiatives.
The FSB invites stakeholders to submit case studies on these issues under the subject heading „Data frameworks“ by 20 October 2023, which will be considered in the development of recommendations for public consultation in early 2024.