Instant payments are electronic fund transfers processed and settled in real time, allowing money to move between accounts within seconds, at any time of day. Unlike traditional bank transfers, which may take hours or days, instant payments provide continuous, near-instant settlement across digital banking channels.
While they enhance convenience and economic efficiency, instant payments also create new challenges for anti-money laundering (AML) compliance. The speed and volume of transactions leave compliance teams with less time to detect and respond to suspicious activity.
Instant Payments
Instant payments, sometimes referred to as “real-time payments,” are transfers where funds are made available to the recipient immediately after initiation.
Key characteristics include:
24/7/365 availability: Payments can be made at any time, including weekends and holidays.
Immediate settlement: Funds are transferred and made usable in seconds.
Wide application: Used for retail payments, peer-to-peer transfers, and increasingly in cross-border contexts.
These features make instant payments attractive to consumers and businesses, but also attractive to criminals seeking to move illicit funds quickly.
Why Instant Payments Matter In AML Compliance
Instant payments matter in AML compliance because their speed reduces the window for financial institutions to detect suspicious activity.
Regulatory expectations: The Financial Action Task Force (FATF) has highlighted the risks of fast payment systems being exploited for money laundering and terrorist financing.
Regional regulations: The European Commission has introduced rules requiring EU banks to offer instant payments while ensuring equivalent AML checks as with traditional transfers.
Operational risk: Institutions must adapt monitoring and Alert Adjudication processes to keep pace with real-time transaction flows.
Without appropriate safeguards, instant payments could enable criminals to transfer illicit funds across borders faster than they can be flagged.
Core AML Challenges In Instant Payments
The speed of instant payments creates unique compliance challenges that require technological adaptation.
Reduced Detection Window
Traditional transaction monitoring often relies on overnight or batch screening. Instant payments eliminate this buffer, requiring real-time Transaction Monitoring.
High Transaction Volumes
Instant payments increase overall transaction volume, overwhelming manual processes and increasing false positives.
Cross-Border Complexity
When linked to cross-border systems, instant payments can obscure origin and destination, making it harder to assess geographic risk.
The Future Of Instant Payments And Compliance
The future of instant payments is one of continued expansion, supported by regulatory frameworks and central bank initiatives.
The challenge will be ensuring AML compliance keeps pace.
Regulatory harmonisation: The Bank for International Settlements (BIS) is promoting interoperability between national instant payment systems, making cross-border transfers faster but requiring coordinated compliance.
Technology adoption: AI-driven screening tools and advanced analytics are becoming essential for detecting suspicious activity within seconds.
Integration with central bank digital currencies (CBDCs): As CBDCs emerge, they are expected to be integrated into instant payment infrastructures, further increasing compliance demands.
Institutions that fail to adapt risk exposing themselves to regulatory penalties and financial crime vulnerabilities.
Strengthen Your Instant Payments Compliance Framework
Instant payments are transforming how money moves, but their speed and scale demand stronger compliance measures. Institutions that modernise their monitoring and screening systems will stay ahead of both regulatory expectations and financial crime risks.
Facctum’s Transaction Monitoring and Alert Adjudication solutions provide the real-time capabilities needed to keep instant payments secure and compliant.
Contact Us Today To Strengthen Your AML Compliance Framework
