TFR compliance: challenges and strategies for banks and brokers
New legislation continues to reshape the financial landscape. What impact does the EU’s Transfer of Funds Regulation (TFR) have on financial institutions? And how should they prepare to anticipate future changes?
Why the TFR regulation matters to banks and brokers
The TFR regulation is the latest EU legislative measure aimed at improving the traceability of financial transfers to prevent money laundering and terrorist financing. While the initial draft focused on traditional fiat currency transactions, the framework’s scope was later expanded to include crypto assets, in a bid to ensure the same standards apply to all types of fund transfers within the EU (and the wider EEA).
Originally introduced in 2023, the legislation came into full effect at the start of 2025. Together with the new MiCA regulation, it now forms one of the pillars of crypto-asset regulation in Europe.
TFR: information and identification requirements
Payment providers (including crypto-asset service providers) must now include specific information about both the sender and recipient of every transaction, for any currency or crypto-asset. This mandatory information includes names, account numbers and addresses. For transfers exceeding €1,000, all parties involved must also be properly identified.
The TFR applies across the entire European Economic Area (EEA), making it essential to avoid compliance gaps with the non-EU EEA countries (Norway, Iceland and Liechtenstein).
Impact on financial institutions
The TFR’s traceability, verification and reporting obligations can have a significant impact on financial institutions and their compliance specialists.
The key? Preventing an excessive compliance burden. The mandatory additional identity verification checks introduce extra steps into transaction providers’ Know Your Customer (KYC) process. Stricter enforcement and the introduction of penalties mean that non-compliance with the TFR can result in substantial fines and potential reputational damage for financial institutions.
To mitigate this risk, compliance teams at banks and brokers must ensure that their institution’s internal policies fully align with TFR standards at all times. They must have access to always up-to-date client data and implement strong risk monitoring to flag suspicious transactions.
Proactive TFR compliance strategies through Harmoney
Compliance professionals and financial institutions should safeguard their organisations against the regulatory and operational risks that the TFR poses.
From a technology perspective, this implies they must keep their transaction monitoring systems up to date at all times and collaborate with other institutions for seamless information sharing.
At Harmoney, we provide support by offering a modular platform that combines an open architecture with easy integrations into existing tools and platforms, such as core banking systems, watchlists and screening software like NetReveal and SAS AML. This modular approach allows financial institutions to select the features they need to automate their data enrichment and AML screening, reach out to clients for identification updates, and customise their risk scoring. In combination with other compliance-related tools we integrate with - such as KUBE for information-sharing across banks – compliance specialists can fulfil their critical role and ensure they meet new verification and reporting requirements.
Harmoney offers a cutting-edge digital platform that streamlines intricate onboarding and compliance procedures, featuring automated screening functionalities. Interested in discovering more about our innovative solution? Reach out to us for further details!