The European Banking Authority (EBA) published two sets of guidelines with the aim to strengthen the anti-money laundering and countering the financing of terrorism (AML/CFT) supervision in the European Union. The revised guidelines on risk-based supervision of credit and financial institutions’ compliance with AML/CFT obligations set out the steps supervisors should take to ensure adequate AML/CFT oversight of their sector and support the adoption, by credit and financial institutions, of effective money laundering/terrorist financing (ML/TF) risk management policies and procedures. The second set of guidelines set out how prudential supervisors, AML/CFT supervisors, and financial intelligence units should cooperate and exchange information in relation to AML/CFT, in line with the provisions laid down in the Capital Requirements Directive (CRD).
EBA has updated and strengthened the guidelines on risk-based supervision in light of the findings from its ongoing work to review the approaches of competent authorities to AML/CFT supervision. These findings suggest that some competent authorities found the implementation of the risk-based approach to AML/CFT supervision challenging. The revised guidelines build on the existing four-step approach to the risk-based AML/CFT supervision and provide additional guidance on ML/TF risk assessments, including the sectoral risk assessment. They also help supervisors choose the most effective tools to meet their supervisory objectives, including in situations when they have identified breaches and weaknesses in institutions’ systems and controls framework and emphasize the importance of cooperation between AML/CFT supervisors and other stakeholders, including prudential supervisors, financial intelligence units, and tax authorities. This cooperation can happen, for example, in AML/CFT colleges, which are permanent structures that bring together AML/CFT supervisors to exchange information relating to institutions that operate on a cross-border basis in at least three member states (AML/CFT colleges are further explained in the related factsheets). Upon their entry into force, the guidelines will foster greater convergence of supervisory practices across the European Union and, as a result, will contribute to further strengthening Europe’s AML/CFT defenses before the new legal framework enters into force. EBA had consulted on these guidelines between March and June 2021.
The guidelines on AML/CFT cooperation put in place the practical modalities of cooperation and information exchange between prudential supervisors, AML/CFT supervisors, and financial intelligence units, both at the level of member states and across the Single Market in European Union. The guidelines facilitate and support the cooperation and information exchange throughout the supervisory life cycle covering authorizations of new institutions, ongoing supervision including the risk assessment, and, where relevant, the imposition of supervisory measures and sanctions, including the withdrawal of the authorization. While each authority has its own role and responsibilities in the fight against ML/TF, there are areas where their tasks complement each other and, therefore, effective cooperation and information exchange among them is essential to identify, address, and mitigate the ML/TF risks. Such effective cooperation and information exchange is fundamental to ensure the prudential soundness and viability of institutions and the stability of the financial system as a whole. EBA had consulted on these guidelines between May and August 2021.
- Guidelines on Risk-Based Supervision
- Guidelines on AML/CFT Cooperation
- Factsheet on AML/CFT Supervisory Colleges
- Factsheet on EBA Approach to Monitoring AML/CFT Colleges
Keywords: Europe, EU, Banking, Lending, AML/CFT, ML/TF Risk, Guidance, CRD, Supervisory Colleges, Credit Risk, AMLD, EBA
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