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.
Keywords: Europe, EU, Banking, AML/CFT, ML/TF, SREP, AML Action Plan, CRD, Prudential Supervision, EBA
Previous ArticleAPRA Enforces Stable Funding Requirements on Banks
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA updated the report on the implementation of selected COVID-19 policies.
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.