Table of contents
Introduction
Postal addresses are essential for the proper identification of parties in financial transactions. The ISO 20022 Postal Address element provides a standardised format for address information, ensuring consistency and accuracy across different systems and countries.
This standardisation is crucial for financial institutions because it facilitates better data quality, enhances the efficiency of payment processing, and improves compliance with regulatory requirements.
The importance of the Postal Address is its ability to:
- Improve data quality: With a consistent format for address information, the Postal Address reduces errors in data entry and processing.
- Enhance transaction efficiency: Postal Address data enables automated processing of financial transactions, reducing the need for manual intervention and speeding up transaction times.
- Facilitate regulatory compliance: With the increasing focus on anti-money laundering (AML) and counter-terrorist financing (CTF), the Postal Address field enables a more effective and efficient fight against financial crime with clearer, more accurate information for transaction screening and monitoring.
In essence, the Postal Address element is intended to streamline financial transactions by providing a clear, standardised format for address information, which is a critical component in the global financial ecosystem.
Why is it important?
The benefits of the ISO 20022 Postal Address field will collectively contribute to a more integrated and efficient financial infrastructure, supporting the seamless processing of payments by minimising transaction delays and investigations, reducing friction and improving customer experience. . In addition:
The Financial Action Task Force (FATF)
FATF started the revision of Recommendation 16 which defines the information that must be included in payments. The revision is in progress, but the draft shared for public consultation in early 2024 suggests that:
- The address of the Debtor and Creditor must be supplied, or, in the absence of an address, then the country and town name
- Information should be structured, to the extent possible, in accordance with the established standards of the system used such as ISO 20022, and should be sufficiently detailed to enable identification of the Debtor and Creditor
Both of these requirements were largely anticipated and are supported by CBPR+ and HVPS+ usage guidelines. The structure of the ISO 20022 Postal Address element and the evolution towards fully structured or hybrid options will make it simpler for institutions to verify the presence of required information.
View from the PMPG
With the payments industry getting on board with ISO20022 and new rules like FATF recommendation 16, plus the G20 goals for better payment data quality and accuracy - moving to structured and hybrid addresses is a game-changer. It will cut down on the speedbumps in cross-border payments and make things more transparent and even more efficient. - Dominik Vogel, Executive Director, Lead Product Owner Instant Payments Transformation, UBS
What are the CBPR+ usage guidelines?
The following timeline has been outlined for the adoption of structured and unstructured address options:
Until November 2025, there are two options available for the Postal Address field:
- Structured: This option allows using up to 14 qualifiers for the Address components and requires a minimum of the TownName and Country to be included in a structured format.
- Unstructured: This option allows the address to be provided in up to 3 lines of unstructured format.
Both options are mutually exclusive, so institutions can only use the structured option if they can map all address details in their respective components, which can be a challenge where institutions store addresses in free text format.
As of November 2025, a Hybrid option will be allowed. This means that the address can include both structured and unstructured elements, providing flexibility while transitioning to fully structured formats.
By November 2026, the Unstructured option will be phased out, and all address fields will need to be in a structured or hybrid format.
This phased approach allows for a gradual transition to Postal Addresses, ensuring that all parties have ample time to update their systems and processes to comply with the new standards.
Which address should be used?
The Wolfsberg Group has provided useful guidance concerning the roles and responsibilities of key stakeholders in the payment chain, the type of address and address components to include, as well as the controls to implement here: Wolfsberg Group Payment Transparency Standards 2023
What are some useful lessons learned?
The transition from unstructured to structured address fields requires institutions to deploy system upgrades supporting increased data granularity, structuring their customer data, and upgrading their customer front-end and file-based channels to capture structured data related to Creditor.
Because of this, most banks start with unstructured addresses and then progressively implement structured ones. Some institutions are also awaiting on the introduction of the hybrid option in November 2025 before rolling out changes.
Some lessons learned include:
- Interoperability considerations: There are some minor discrepancies in the Postal Address requirements for ultimate parties (Ultimate Debtor, Ultimate Creditor, Initiating Party) between CBPR+ and HVPS+ usage guidelines.
Top tip: Institutions should ensure they respect all rules – including Textual Rules – where cross-border payments are intended for clearing and settlement in a Payment Market Infrastructure.
- Mapping errors and repeated information: Analysis of the structured options reveals that some data mapping errors exist (e.g.: Postcode and town name in the TownName tag).
Top tip: It’s important to find and fix these kinds of data quality issues because they can impact the overall quality of screening and monitoring.
- Use of translation tools: Translation tools work with pre-defined mapping rules and cannot map free text information to structured data elements. As such, they can only be used to create unstructured Postal Address fields which will not be allowed after November 2026. They also cause other critical data quality challenges when the end of a name that exceeds 35 characters is mapped into the first line of the Postal Address.
Top tip: Institutions should preferably work towards implementing native creation of ISO 20022 messages and not rely on translation tools.
What are some of the challenges identified?
Some of the challenges highlighted are:
- Transition to postal addresses: Banks are starting with unstructured address fields and progressively implementing structured ones to improve the quality of data in financial messages and enhance efficiency in processing transactions. This transition is necessary to comply with the evolution of CBPR+ and HVPS usage guidelines in 2025 when the hybrid option is introduced; and in 2026 when the unstructured option is no longer allowed.
- Debtor and creditor information: Banks face different challenges when it comes to debtor and creditor information. For debtors, banks need to ensure their own information is structured correctly. For creditors, the challenge lies in capturing structured information from customers, which often requires updating application channels to accommodate the structured data.
- Customer education: The increased regulatory requirements and the need to structure information will force institutions to explain to their retail and corporate customers the reasons they need to supply additional information. Whilest ultimately this will benefit customers, such change can be complex and lengthy.
Where can you find more information?
PMPG guidance papers
The 2024 PMPG paper on hybrid postal addresses is a valuable resource. It discusses the transition to Postal address fields and the hybrid option that allows for a combination of structured and unstructured address data.
Download
Wolfsberg Group paper
It’s important to note that the adoption of ISO 20022 structured data fields is not just about compliance, but also about improving payment processing efficiency and customer experience by reducing friction and potential delays caused by unstructured data.
The transition to ISO 20022 is a significant change that impacts all participants in the payment chain, and starting to prepare for these changes now is crucial for a smooth transition in the future.
The 2023 Wolfsberg Group paper on payments transparency describes why transparency is necessary, for example, to allow recipients to be able to apply incoming funds appropriately.
Guiding principles for screening ISO 20022 payments
Transparency is equally as important to managing financial crime risk, as it allows the screening of payments against sanctions lists and makes possible the process of transaction monitoring to identify unusual or suspicious activity, as required by law.
If information about the transacting parties and the purpose of the payment are absent or incomplete, financial crime compliance processes will be made less effective and result in more friction, increased delays, and higher costs for all in processing payments.
The Guiding Principles for Screening ISO 20022 payments provides insights on how the structured data elements such as the Postal Address can be used for more effective and efficient screening. Find more info in the link below:
