SEPA Migration Checklist

Dear client,

Single Euro Payments Area (SEPA) standards become mandatory across 17 Euro member states on 1 February 2014. If your organization initiates Euro ACH payment or direct debits, action needs to be taken to ensure compliance. This email series is intended to provide you with relevant information and practical guidance.

How does mandate management change with SEPA?

Today, mandate management processes differ on a country by country basis. Generally, countriesí mandate management requirements can be grouped into two major categories:

Debtor driven managed flow (DMF) and
Creditor driven managed flow (CMF)

The main difference between CMF and DMF is that the ultimate responsibility of holding and storing a completed mandate would lie with collector (creditor) in a CMF process whereas in the DMF model it is with the payerís (debtor) bank. In a DMF model debtor banks have the option of checking the authorisation of the creditor based on the mandate when the instruction is passed from clearing to the debtor bank.

With SEPA direct debits, both the Core and the B2B schemes are designed to adopt CMF flow process. This means that creditors will be required to build and maintain a mandate database for all the countries where they are collecting using SEPA direct debits, even those that previously were DMF. The main requirements for that database would be able to hold and retrieve the mandate (in dematerialised form) and record activity or usage. Any mandate amendments would be required to be stored with the original mandate. Creditors will be required to produce the mandate stored in case of refund claims for suspected unauthorised transactions.

The SEPA mandate management impact on creditors would depend on the following scenarios:

Creditor chooses to migrate to SEPA DD Core scheme where allowed.


• Obtain valid legacy data: Creditors need to obtain legacy mandate data and this is particularly important in DMF countries. Belgium, for example, is one such country and to assist the move to SEPA the Belgian Central Bank have set up a database of their own of all legacy mandate data to assist migration. Belgian banks (including Citi) can request the information in electronic format and share with their clients.


• Complement information with data gathering (in order to convert into SEPA DD compliant mandates): Gap analysis is required to be conducted on legacy mandates versus SEPA DD core mandate to understand what information is required to be further obtained and stored in the mandate database. Common data points to be gathered are: unique mandate reference, BIC and IBAN.


Creditor chooses to migrate to SEPA DD B2B scheme where allowed or chooses to implement new SEPA DD Core scheme.


Obtain new signed debtor mandate: B2B mandate template or Core mandate template.


In addition only applicable for B2B scheme: ask debtors to lodge a copy of the new mandates with their bank.

For further details on the country-by-country impact, please visit Citiís Direct Debit Guide.

SEPA has the ability to deliver real value to your organization. Citi is committed to delivering solutions that enable you to capitalize on the benefits that SEPA offers.

To put our expertise to work for you today, please contact your Citi representative or visit our SEPA website at www.transactionservices.citi.com/SEPA

Treasury and Trade Solutions.

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