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    EBA Issues Opinion on AML/CFT Concerns from Prudential Perspective

    July 24, 2019

    EBA published an opinion on the link between money laundering and terrorist financing (ML/TF) concerns and prudential objectives. This opinion forms part of the ongoing work of EBA to strengthen the fight against ML/TF in Europe and responds to a request in the Council Anti Money Laundering Action Plan of 2018. With this opinion, EBA invites prudential supervisors to send a common message to institutions that prudential supervisors factor anti-money laundering/countering the financing of terrorism (AML/CFT) issues into the prudential supervisory process and cooperate closely with AML/CFT supervisors for this purpose.

    ML/TF can have a significant, adverse impact on an institution's safety and soundness. This is why prudential supervisors need to be aware of, and act on, ML/TF risks, which may pose prudential risks to the institutions they supervise and in particular:

    • When considering whether to authorize an institution or when assessing proposed acquisitions of qualifying holdings
    • As part of their ongoing supervision of institutions, for example, when assessing the adequacy of the governance and risk management systems of an institution
    • When taking corrective measures to address potential weaknesses from a prudential perspective

    EU legislators have taken a number of steps to clarify and strengthen the important link between AML/CFT and prudential issues and to complement the existing legal framework in EU. These steps include amendments to the Capital Requirements Directive (CRD), which further clarify the link between prudential supervision and AML/CFT supervision and require prudential supervisors to act on AML/CFT information. The EU Council made clear in its action plan of 2018 that the link between ML/TF risk and prudential objectives means that prudential and AML/CFT supervisors must cooperate closely and share information in the discharge of their respective functions. Where institutions operate across borders, EBA expects supervisors to cooperate with their international counterparts.

     

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    Keywords: Europe, EU, Banking, AML/CFT, ML/TF, SREP, AML Action Plan, CRD, Prudential Supervision, EBA

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