A brief introduction to the Ultimate Parties field

Why is it important?

In payment processing, Ultimate Parties refer to the entities or person on whose behalf transactions are conducted:

• Ultimate Debtor: The ultimate party that owes an amount of money to the (ultimate) creditor/beneficiary. This party is distinct from the immediate debtor when payments are made on behalf of another party.
• Ultimate Creditor: The ultimate party to which an amount of money is due. This party is distinct from the immediate creditor when payments are received on behalf of another party.

Capturing this information is critical to achieving payment transparency, especially in cross-border transactions where multiple intermediaries may obscure the true origin or destination of funds. Ultimate Party data elements allow financial institutions to trace the full economic context of a payment, which is crucial for sanctions screening, anti-money laundering (AML), and regulatory reporting.

As ISO 20022 becomes the global messaging standard, the presence and quality of Ultimate Party information will directly impact an institution's ability to remain compliant, reduce false positives, and improve operational efficiency in the modern financial ecosystem.

What are the CBPR+ usage guidelines and the Payment Transparency Principles?

The Cross-Border Payments and Reporting Plus (CBPR+) group has developed usage guidelines to ensure consistent implementation of ISO 20022 messages in cross-border payments. These guidelines provide specific instructions on how to populate Ultimate Party data elements to maintain data integrity and facilitate straight-through processing. Adhering to these guidelines helps institutions avoid common pitfalls and ensures interoperability across the global payments network.

For example,

Payments on Behalf of (POBO):

• Scenario: A parent company initiates a payment on behalf of its subsidiary.
• Implementation: To maintain consistency across the payment industry and ensure compliance with payment messaging standards:
  • Debtor: The parent company, as the account owner and the party legally responsible for the payment, must be identified as the Debtor. This reflects the entity from whose account the fuds are being debited.
  • Ultimate Debtor: The subsidiary, on whose behalf the payment is made, should be populated in the Ultimate Debtor data element. This provides additional context while keeping the parent company clearly recognized as the debtor, maintaining transparency.

Collections on Behalf of (COBO):

• Scenario: A factoring company collects payments on behalf of a client.
• Implementation:
  • Creditor: The factoring company, as the account owner and the entity legally entitled to receive the funds, must be identified as the Creditor. This reflects the party whose account is being credited.
  • Ultimate Creditor: The original supplier (the client of the factoring company), on whose behalf the funds are collected, should be populated in the Ultimate Creditor data element to provide transparency about the underlying transaction.

Moreover, the revised Wolfsberg Payment Transparency Standards advocates for clear delineation of parties involved in payment transactions to enhance anti-financial crime controls. Proper identification of Ultimate Parties is crucial as non-compliance, such as concealing ultimate beneficiary details could lead to regulatory consequences.

Institutions should implement processes to capture accurate Ultimate Party details before initiating the payment message. This proactive approach ensures compliance with transparency standards and reduces the risk of processing delays or regulatory issues. This will improve the efficiency of cross-border payment processing.

Best Practices for populating Ultimate Party fields

To maintain data quality and ensure seamless processing of payment messages, consider the following best practices:

• Avoid Duplication: Do not repeat Debtor or Creditor details in the Ultimate Debtor or Ultimate Creditor fields. Each field should distinctly represent the appropriate party to prevent redundancy and confusion.
• Exclude Product Names: Refrain from including product or service names in Ultimate Party fields. These fields should strictly contain information pertinent to the Ultimate Parties to maintain clarity and relevance.
• Provide Complete Details: Ensure that all relevant information, such as full legal name, address, and identification numbers, is accurately populated for Ultimate Parties. This completeness supports effective compliance screening and reduces the risk of processing delays.
• Accurate Identification of Service Providers: When a payment service provider (PSP) is involved in servicing a debtor or creditor that owns an account on their books – it acts solely as an agent and must be identified as an agent in the Debtor Agent or Creditor Agent data element. The account owner must be correctly recorded as the Debtor or Creditor, as applicable.
• Avoid Placeholder Text: Do not use terms like "NOTPROVIDED" in Ultimate Party fields. Providing precise and complete data is crucial for compliance and operational efficiency.

Addressing common challenges

Financial institutions may encounter challenges during the migration to ISO 20022, including:

• Interoperability: Ultimate Party details were usually included in unstructured formats under the free-text fields such as remittance information or narrative fields. With ISO 20022, mapping is made possible for such information for accurate translation and compliance. However, legacy systems may have limitations on data field lengths or may be unable to read the Ultimate Party tags, leading to potential truncation of Ultimate Party information. It's essential to assess and upgrade systems to accommodate the expanded data fields in ISO 20022. Some Payment Market Infrastructures (PMIs) may impose additional requirements beyond CBPR+ guidelines, which can pose interoperability challenges involving varying regional rules. It is hence fundamental to assess both CBPR+ and local PMI requirements to ensure proper screening and local compliance rules are met.
• Inconsistent Adoption: Different institutions interpret when and how to populate Ultimate Party data elements. Such inconsistency leads to friction, poor reconciliation and failed automation across the payment chain. Adopting the CBPR+ Usage Guidelines, PMPG guidelines and aligning to Payment Transparency Standards could remedy the situation.
• Lack of Source Data Availability: Institutions or corporates often don’t collect Ultimate Debtor or Creditor data at the point of payment initiation. Payments could be initiated through a treasury system that doesn’t capture the true underlying Debtor, leaving the Ultimate Debtor field empty. It is fundamental to update front-end channels to explicitly collect Ultimate Party information and allow internal systems to inherit Ultimate Party data from the upstream processes.

Where can you find more information

PMPG guidance papers

The 2025 PMPG paper on ultimate parties is a valuable resource that discusses on correct identification and provision of ultimate parties in the payment messages.

Download

Data Quality Analytics

Providing actionable insights through predefined dashboards to assess the completeness, consistency and validity of key message fields in your ISO 20022 payment messages.

Find out more here

Supercharge your payments business with ISO 20022

Chapter 5 on Use case 1 – Streamline financial crime compliance discusses how ISO 20022’s structured data elements, including those for ultimate parties, enhance financial crime compliance by reducing false positives and improving sanctions screening.

Find out more here