This blog has covered in depth the SEPA timeline for euro payments and direct debits, starting with the initial deadline (1st February 2014) and the 6 months grace period which culminated in the final (1st August 2016) SEPA deadline. So you’re probably wondering, what the heck is this euro payments to be SEPA compliant by 31st October, 2016 malarky ?!?! This post will tell you whats going on….
SEPA, Euro Payments and the 2014 Deadline
The post What Is In Scope for 1st February, 2014 describes the euro payment processes that needed to adhere to the SEPA standards in 2014. The important thing to note is that the SEPA Regulation enforced the 2014 deadline for European Union (EU) euro currency countries only
Which EU countries were SEPA compliant in 2014?
Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Portugal, Slovakia, Slovenia, Spain
Note: These are euro currency countries
What is Happening on 31st October 2016 ?
- Since EU euro-currency countries are already SEPA compliant (thanks to the 2014 deadline), October 2016 essentially impacts non-euro currency EU countries
- Non-euro currency EU countries will need to submit their “local” or “legacy” formatted euro currency payments in accordance with the SEPA guidelines
- Euro payments must adhere to the SEPA Credit Transfer scheme
- Euro direct debits conform to the SEPA Direct Debit schemes
- Importantly, these legacy or local euro payments/direct debits must be submitted to payment service providers in the ISO 20022 XML format using the IBAN bank details
Which EU countries are impacted by 31st October 2016 SEPA Deadline?
Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, United Kingdom
Note: These countries have their own national currencies and are referred to in this post as non-euro currency EU countries,
What is the Regulation that enforces SEPA Compliance in non-euro currency EU Countries?
It is Regulation (EU) No 260/2012 – Article 16. Take a read…. :p
Only Euro-Currency Transactions are Impacted!
Just to be absolutely clear, you can continue to use:
- All local formats in the above listed EU non-euro currency countries for domestic payments
- For example sterling (GBP) payments and formats such a BACS will continue to be used and supported in the UK
- Euro payments can continue to be made using the SWIFT MT101 format
What Should I Do Next?
If you have payment processes happening in Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, United Kingdom:
- Find out if there are any euro currency payments being made
- If euro payments are being made, understand which formats are being used
- If you are using a local or legacy euro currency format it is highly likely that you will need to change this to adhere to the SEPA rules (see above)
- If any manual euro currency payments are being made, for example using internet banking, these options will also need to change to the SEPA Payments equivalent
- Hurry Up – You have 2 months to comply!
Do you know if asset / investment managers that initiate credit transfers between client and/or investment fund custodial accounts via SWIFT MT202 messages (sent to the payer account’s custodian) are required to follow the IBAN only rule such that IBANs are required in both Tags 53 (payer/debit account) and 58 (payee/beneficiary account), or is the IBAN only required for the beneficiary account in Tag 58, not required at all for EUR payments?