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    EBA Publishes Draft Guidelines and Report on AML/CFT Supervision

    February 05, 2020

    EBA launched a consultation on the revised guidelines on money laundering and terrorist financing (ML/TF) risk factors as part of a broader communication on AML/CFT issues. This update takes into account changes to the EU Anti Money Laundering and Counter Terrorism Financing (AML/CFT) legal framework and the new ML/TF risks, including those identified in the implementation reviews of EBA. The consultation ends on May 05, 2020. Additionally, EBA published its first report on the competent authorities’ approaches to the AML/CFT supervision of banks. This report describes broadly how competent authorities in this year’s sample apply the risk-based approach set out in international standards. This guidelines and report are part of the EBA’s new role to lead, coordinate, and monitor the fight against ML/TF, which has been explained in the accompanying factsheet.

    Proposed Guidelines on AML/CFT Risk Factors

    The draft guidelines, which are addressed to both financial institutions and supervisors, set out factors that institutions should consider when assessing the ML/TF risk associated with a business relationship or occasional transaction. EBA is proposing key changes, including new guidance on compliance with the provisions on enhanced customer due diligence related to high-risk third countries. New sectoral guidelines have been added for crowdfunding platforms, corporate finance, payment initiation services providers, and account information service providers and for firms providing activities of currency exchanges offices. 

    The revised guidelines provide more details on terrorist financing risk factors and customer due diligence measures, including the identification of the beneficial owner and the use of innovative solutions to identify and verify customer identity. In addition, the proposed guidelines set clear regulatory expectations of firms’ business-wide and individual ML/TF risk assessments. The proposed changes will significantly strengthen AML/CFT defenses in Europe and foster greater convergence of supervisory practices in areas where supervisory effectiveness has been hampered, so far, by divergent approaches in the implementation of the same European legal requirements.

    Report on Approaches of Competent Authorities to AML/CFT Supervision

    The EBA findings show that most competent authorities in this year’s sample are taking significant steps to strengthen their approach to AML/CFT supervision. Several competent authorities have made the fight against ML/TF one of their key priorities and, in a number of cases, significantly expanded their AML/CFT supervisory teams. Nevertheless, EBA found that significant challenges remain and are common to all competent authorities in the sample. These challenges include the need to move away from a focus on tick-box compliance to assessing the effectiveness of the AML/CFT systems and controls of banks. Competent authorities also need to strengthen their approach to ensuring compliance by taking more proportionate and sufficiently dissuasive measures to correct deficiencies in the AML/CFT systems and controls of banks. Finally, EBA found that not all competent authorities were able to cooperate effectively with domestic and international stakeholders to draw on synergies and to position AML/CFT in the wider national and international supervisory framework.

     

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    Comment Due Date: May 05, 2020

    Keywords: Europe, EU, Banking, AML/CFT, ML/TF Risk, Risk-Based Approach, ML/TF, Guidelines, EBA

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