SEPA and Brexit from 1.1.2021: be ready for the end of the transition period.

On 7 March 2019, the EPC published its decision paper on Brexit and United Kingdom’s (UK) payment service providers’ (PSP) participation in the EPC SEPA payment schemes, approving UK Finance's application for the continued participation of UK in the EPC SEPA payment schemes, even in the event of a “no-deal Brexit”, provided that the UK keeps complying with the relevant SEPA participation criteria.  

On 31 January 2020, the UK formally left the European Union (EU) and entered into an 11month transition period, agreed within the Withdrawal Agreement with the EU, which will run until 31 December 2020, 11 PM, GMT. 

By effects of said transition period, until 31 December 2020 the UK is a non-European Economic Area (EAA) country temporarily part of the European single market and customs union, subject to the relevant EU regulatory framework. Therefore, as communicated earlier this year during the remainder of the transition period the UK will continue operating within the scope of the SEPA payment schemes without any change, due to the fact that existing EU rules and regulations will continue to apply in the UK. To this extent, between 1 February and 31 December 2020, no new requirement will apply, and no changes will be needed for the SEPA Credit Transfer (SCT) / SEPA Direct Debit (SDD) transactions to and from the UK.  

However, as of 1 January 2021 as no extension of the transition period was agreed, the UK is set to leave the single market and customs union, either with an   EU-UK deal, negotiated during the transition period, or without it (i.e. "no-deal" Brexit). For clarity, the UK will at that point maintain participation in the SEPA geographic scope, however, this important change will make the SCT/SDD rules applicable to transactions from/to non-EEA jurisdictions also applicable to SCT/SDD transactions with the UK.  

The EPC therefore requests all  PSPs  and SCT/SDD users to implement without delay the measures described below, to ensure a continued smooth processing of cross-border payments involving a UK-based SEPA   payment scheme participant after 31 December 2020. 

SEPA   transactions to be executed or settled as of 1 January 2021 involving a UK-based SEPA payment scheme participant must contain:  

For SCT and    SEPA Instant Credit Transfer (SCT Inst.) instructions from the Originator:   The full address details of the Originator.  The BIC code of the Beneficiary Bank when the Originator Bank explicitly requests this data element from the Originator.

For SDD and SDD Business-to-Business (B2B) collection files from the Creditor:   The full address details of the Debtor. The BIC code of the Debtor Bank when the Creditor Bank explicitly requests this data element from the Creditor. 

Due to the fast approaching date of 1 January 2021, we would like to draw your attention to the fact that your bank may reject SEPA payment or direct debit orders sent to the United Kingdom from that date due to the missing address of the payee / payer or BIC of the payee / payer's bank.

Since MultiCash Transfer transfers (or allows to enter) those information, we recommend that every client sending SEPA payment transactions or direct debits to the United Kingdom ensures individually that its systems will meet these requirements (adds a code list in the ERP system) from 1 January 2021 (date of execution or settlement of the transaction).

Source: EPC webpage