Dáil Éireann Debate, Thursday - 17 June 2021
353. Deputy Claire Kerrane asked the Minister for Social Protection further to Parliamentary Question No. 423 of 5 May 2021, the action that has been taken to ensure that those receiving pension payments overseas are no longer subject to bank charges in recognition of the reduction these charges cause to pension payments as a result of recent charges which were not in place before; and if she will make a statement on the matter. [32677/21]
View answerMy Department, in conjunction with all Government Departments and Offices, moved its banking operations to Danske Bank on foot of a Government Decision to tender for an “All of Government” Banking Service. This migration of the Department’s banking services to the new provider, Danske Bank, was completed last month.
One of the last banking migration phases was the moving of foreign EFT payments, which was carried out in March 2021. These payments are to beneficiaries who are resident in 21 countries outside of both the Single European Payments Area (SEPA) and the United Kingdom. While the migration of these foreign payments to Danske Bank was successful, beneficiaries in the United States and Canada were levied with cross border payment charges by their own banks.
While the Department of Social Protection has no control over the fees charged by foreign banks to their own customers, the Department has been in continuous liaison with Danske Bank to try and reduce or eliminate the fees which U.S. and Canadian banks might charge their own customers. The Department has also implemented a number of payment process changes to Social Welfare pension payments to help in this regard.
EFT payments to markets outside Ireland where the sending bank is not a member of the domestic clearing system, such as the US or Canada, are processed as international cross border payments, also known as ‘international wire transfers’. Processing such payments as international wire transfers ensures that the sending bank complies with its national and international Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) obligations. In order to effect these international wire transfers in markets such as the US and Canada, the services of correspondent banks are necessary, and their use is the industry standard approach. Correspondent banks will deduct charges from the payment amount to compensate for the cost of processing the payment and discharging their AML and CTF obligations.
As previously outlined in Parliamentary Question No. 423 of 5 May 2021, Danske Bank secured a significant reduction in the processing charge levied by its American correspondent bank on the Department’s payments to pensioners resident in the United States. In addition, the Department amended its Social Welfare payment files to ensure that all pension payments to beneficiaries outside the SEPA zone and the UK are clearly marked as pension payments. This change was in place for all payments to North America in April.
Many bank customers in both Canada and the United States can avail of reduced bank fees on pension payments, depending on the financial institution that they bank with and the type of account they hold. The Department is aware of a number of pensioners in both the United States and Canada who no longer incur any charges due to these payment processing changes, in particular the explicit marking of the Department’s payments as pension payments.
For pension payments to Canada, the Department of Social Protection has implemented a number of changes to its payment file processing to enable Danske Bank to direct payments to additional correspondent banks. These changes have ensured that payments to most pensioners in Canada should only incur one set of cross border fees. With these process changes the number of correspondent banks that can handle Social Welfare payments has changed from one in March, to four in April and six in June.
Further changes are currently being implemented which should eliminate duplicate cross border fees for the remaining pensioners who do not have an account in one of these six Canadian correspondent banks. It is hoped that this change will be in place for pension payments issued in July 2021.
The Department of Social Protection continues to liaise with Danske Bank in relation to this issue.
