Navigating AML Requirements for Payment Initiation Service Providers (PISPs): The Challenging Fulfilment of Customer Due Diligence

One of the most enduring debates in the context of the anti-money laundering legislation pertains to the width of its “regulatory net” vis-à-vis the constantly evolving financial ecosystem. This holds particularly true in light of the accelerated pace at which financial innovation occurs, resulting in new industry players, digital services and innovative technology-enabled operational models. A sector where technology advancement brought about major novelties is most certainly the payment one. In the quest to promote competition and ensure a better user-experience, in fact, the EU legislator opened up for new services and providers, like the account information service and the payment initiation service providers. The provision of the latter raised a host of regulatory questions relating to the correct fulfillment of AML requirements, specifically regarding the customer due diligence obligation. The aim of this article is to analyze whether and how payment initiation service providers have to carry out the customer due diligence obligations. The major challenging issues (e.g. who the “customer” is for the purposes of the AML legislation and, consequently, how the relationship with such customer should be qualified) will be examined in light of the current regulatory framework and the new Regulation (EU) 2024/1624 (“AMLR”).