The European Commission on 23 July 2024 published clarifications around the requirements of the instant payments regulation (IPR). In this series, we asked industry experts in Luxembourg about their key takeaways from the list of Q&As. Here’s what 
Scope of the regulation
“The IPR, part of the European Commission’s retail payments strategy, applies to all payment service providers (PSPs),” explained Havard. “This is generally not an issue in most EU countries, but Luxembourg’s financial institutions are primarily active in private or corporate banking sectors. The European Commission clarified that there are no specific exemptions for PSPs with low payment volumes, and that all PSPs, including non-banking entities like payment and electronic money institutions, must comply within a strict timeline.”
Sanctions screening obligations
“Luxembourg’s PSPs face challenges in complying with AML/CFT regulations while executing instant payments,” added Havard. “The 10-second timeframe for processing can hinder proper compliance, risking payment rejections. The EC provided guidelines on managing daily client screening, particularly for SEPA countries using EU-wide lists. This will significantly impact many Luxembourg financial institutions unprepared for these processes.”
Verification of payee obligations
“Even banks offering instant payments are not fully compliant with this new requirement,” said Havard. “The European Commission highlighted the complexity of implementing mechanisms to compare IBAN numbers and corporate clients’ names with the payee’s PSP data. Developing an API for this purpose is a technological challenge that requires clean and usable data.”
“These Q&A sessions offered crucial clarifications for PSPs, informing them of upcoming challenges,” he concluded. “The EC emphasised that penalties, although not yet quantified, will be enforced by competent authorities to ensure strict adherence to the new regulations.”
