Global payments are financial transactions where money is transferred between parties located in different countries. They enable international trade, remittances, investment flows, and cross-border e-commerce.

They matter because they are the backbone of the global economy, but their complexity makes them vulnerable to abuse by criminals. Money launderers, terrorist financiers, and sanctions evaders often exploit global payment systems to move illicit funds. For this reason, regulators impose strict AML (Anti-Money Laundering) requirements on banks, payment service providers, and financial institutions engaged in international transfers.

Global Payments Definition And Core Mechanisms

Global payments can be defined as the infrastructure, processes, and networks that allow funds to move from one jurisdiction to another.

Key mechanisms include:

• Correspondent Banking: Where respondent banks access services through correspondent banks for international transfers.

• Payment Systems: SWIFT messaging, real-time gross settlement (RTGS), and other global clearing systems.

• Payment Service Providers (PSPs): Non-bank entities offering cross-border payment services.

• Currency Exchange: Many global payments involve conversion into a different currency.

Global payments are central to international trade and financial stability, but as noted by BIS-based analyses and the Congressional Research Service, correspondent banking relationships are under pressure from regulatory, compliance, and cost constraints. These pressures can lead to de-risking and increased vulnerabilities to illicit finance when oversight is weak.

AML Risks In Global Payments

Because global payments move across multiple banks, countries, and systems, the risks of financial crime are significant.

• Money Laundering: Criminals may layer transactions through different jurisdictions to obscure origins.

• Terrorist Financing: Global transfers can fund illicit networks covertly.

• Sanctions Evasion: Complex payment chains can be used to bypass restrictions.

• Trade-Based Money Laundering: Global payments tied to manipulated trade documents can disguise illicit flows.

• Nested Relationships: When smaller banks route payments through other banks, creating opacity. 

The Financial Action Task Force (FATF) stresses that international payments must be subject to strong AML controls to mitigate vulnerabilities. Its updated Recommendation 16 standards now require clearer identification of senders and recipients in cross-border payment messages, standardized information requirements, and enhanced transparency to reduce risks of fraud, error, and illicit finance.

Compliance Controls For Global Payments

To reduce risk, institutions handling global payments must deploy robust AML frameworks.

• Watchlist Management: Screening counterparties against sanctions and PEP lists.

• Customer Screening: Verifying identities of senders and recipients, including beneficial ownership.

• Payment Screening: Checking messages and transactions for suspicious or sanctioned parties.

• Transaction Monitoring: Analysing patterns and detecting anomalies in real time.

• Alert Adjudication: Investigating and resolving alerts efficiently to avoid regulatory breaches.

The European Central Bank (ECB) states that ensuring payment systems operate in a safe and efficient manner, including risk-management of operational, legal, credit, and liquidity risks under oversight regulations, is essential for financial stability and demands risk-based compliance controls.

Future Of Global Payments In Compliance

The future of global payments is being shaped by innovation, regulation, and geopolitics.

• Faster Cross-Border Settlements: Initiatives like SWIFT gpi and ISO 20022 aim for speed and transparency.

• Digital Currencies: Central bank digital currencies (CBDCs) could reshape how money moves internationally.

• AI & Real-Time Screening: Advanced analytics will enhance compliance in high-volume global payment flows.

• Regulatory Convergence: Growing alignment across FATF, EU, US, and other jurisdictions.

• De-Risking vs. Inclusion: Banks exiting correspondent relationships raise access concerns for developing countries.

Strengthen Your Global Payments Compliance Framework

Global payments enable trade and growth but bring elevated AML risks. Building a strong compliance framework ensures your organisation can manage international transactions confidently. Effective use of Customer Screening, Watchlist Management, Payment Screening, Transaction Monitoring, and Alert Adjudication is critical.

Contact Us Today To Strengthen Your AML Compliance Framework