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FedNow Tests Cross-Border Payments, With Compliance Built In
📝Editor’s Note
Compliance teams are being asked to support faster payments, automated decisions, and wider use of AI while keeping evidence and controls intact. The latest FedNow developments are a good reminder that faster transactions can also create new questions around screening, accountability, and cross-border oversight.
📊Featured Analysis
FedNow Moves Toward Cross-Border Payments
FedNow is moving closer to supporting cross-border payment use cases for US banks. Federal Reserve Financial Services says selected institutions will begin testing enhanced ISO 20022 messages that can carry information needed for transactions involving parties outside the US. The planned model will not make FedNow a global payment network. Instead, FedNow would settle the US domestic portion of a transaction, while a correspondent bank or another approved intermediary would handle the international leg.
The change follows a Federal Reserve proposal to amend Regulation J and allow FedNow participants to use intermediaries other than Reserve Banks in a funds transfer. That proposal remains subject to the Federal Reserve's approval process. Compliance considerations include sanctions screening, AML checks, fraud controls, and the ability to delay or reject payments when required
Key takeaway: Faster domestic settlement does not remove cross-border compliance duties. Banks should assess how existing screening and monitoring controls will work when FedNow becomes one part of an international payment chain.
✅ Best Practice Spotlight
Build a Strong Compliance Evidence Trail
Assign control ownership: Give each major compliance control a named owner and a clear backup.
Keep evidence with the control: Store approvals, reviews, test results, and exceptions where they can be retrieved during an audit.
Record exceptions: Document why a control was bypassed, who approved it, and what action followed.
Set evidence retention rules: Align retention periods with regulatory requirements and internal policies.
Test the evidence: Periodically check whether another person could understand what happened without asking the original control owner.
Review automated controls: Keep records of rule changes, model updates, overrides, and human approvals..
🛠️ Tool of the Week
Security and Compliance Software
In an age of fraud and impersonation, trust has become an important part of how businesses build lasting relationships with customers, employees, investors, and partners. Building that trust takes time, and organizations must show consistent commitment to protecting stakeholder data and meeting regulatory requirements.
Security and compliance platforms can help businesses maintain this consistency. Secureframe is one such tool that brings compliance requirements, security controls, and related tasks into one platform, helping organizations manage their obligations more consistently.
🌟 Leader Spotlight
Checkr Expands AI Verification Into Insurance
Checkr has launched an AI-powered verification platform for US insurers covering auto, home, and life insurance. The service gives carriers access to verified identity, driving, criminal, and public-record information earlier in the quoting and underwriting process. Checkr says its platform covers more than 260 million profiles and draws data from more than 2,400 government sources, with records refreshed daily. Hippo is among the insurers using additional Checkr data during underwriting. The company says its model can help insurers make faster decisions while reducing the need for manual record checks.
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🗳️ Your Compliance Take
