The European Banking Authority (EBA) reviewed the competent authorities' approaches to the anti-money laundering and countering the financing of terrorism (AML/CFT) supervision of banks and updated the list of institutions with reporting obligation for the supervisory benchmarking exercise in 2022.
The updated list for the 2022 benchmarking exercise includes 115 banks from 16 countries across the European Union and the European Economic Area. The benchmarking exercise assists competent authorities in assessing the quality of internal approaches used to calculate risk-weighted exposure amounts. The exercise covers approved internal approaches used for own funds requirements calculation of credit and market risk as well as internal models used for IFRS 9. The exercise is an essential supervisory tool to enhance the quality of internal models, which is particularly important in a stressed economic situation. EBA runs this exercise leveraging on established data collection procedures and formats of regular supervisory reporting.
The report on supervisory approaches for AML/CFT reviews how competent authorities in this year’s sample apply the risk-based approach set out in international standards. The EBA findings show that most competent authorities in this year’s sample were committed to strengthening their approach to AML/CFT supervision. Several competent authorities took steps to put in place a holistic approach to tackle money laundering and terrorist financing (ML/TF) risks in the banking sector. Furthermore, AML/CFT teams in almost all EBA-reviewed competent authorities grew significantly and are set to expand further. Moreover, cooperation with prudential supervisors and other AML/CFT supervisors in European Union has become a clear priority for all, in line with the regulatory framework of EBA. The review found that cooperation with the Financial Intelligence Units (FIUs) was not always systematic and continued to be largely ineffective. The report also highlights the common challenges and difficulties in:
- identifying ML/TF risks in the banking sector and in individual banks
- translating ML/TF risk assessments into risk-based supervisory strategies
- using available resources effectively, including by ensuring sufficiently intrusive onsite and offsite supervision
- taking proportionate and sufficiently dissuasive enforcement measures to correct AML/CFT compliance weaknesses
- Press Release on List of Institutions
- List of Institutions (XLSX)
- Overview of 2022 Benchmarking Exercise
- Press Release on AML/CFT Supervision
- Report on AML/CFT Supervision (PDF)
Keywords: Europe, EU, Banking, IFRS 9, Basel, Regulatory Capital, AML CFT, ML TF Risk, Benchmarking Exercise, Reporting, Internal Models, Credit Risk, Market Risk, CRD, EBA, Subheadline
Previous ArticleFED Announces Multiple Developments on Regulatory Front
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.