FIN-2012-A010 – Risk Associated with Third-Party Payment Processors

The advisory emphasizes that while third-party payment processors can enhance services and make transactions more cost-effective, they can also make the payment system vulnerable to money laundering, identity theft, fraud schemes, and illicit transactions. Therefore, financial institutions must exercise proper due diligence before entering into a relationship and set up controls to monitor performance.

“There are potential risks associated with relationships with third-party entities, in particular foreign-located payment processors that process payments for telemarketers, online businesses, and other merchants. These relationships can pose increased risk to institutions and may require careful due diligence and monitoring.”

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Source Regulation