EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT). EC had issued this call for advice to EBA, on March 03, 2020, with the aim to define the scope of application and the enacting terms of a regulation to be adopted for preventing money laundering and terrorist financing. In its response, EBA sets out ways to strengthen the legal framework on AML/CFT and recommends that EC should establish a Single Rulebook, with a robust set of common rules supporting the implementation of a proportionate and effective risk‐based AML/CFT regime.
The following are the key highlights of the EBA recommendations to EC:
- Harmonize the EU legal framework in a directly applicable regulation where evidence suggests that divergence of national rules and practices has had a significant, adverse impact on the prevention of the use of the financial system in EU for money laundering and terrorist financing purposes
- Strengthen aspects of the current AML/CFT Directive where existing provisions are insufficiently robust or specific—for example, in relation to supervisory powers of competent authorities in this area
- Review scope of the EU AML/CFT legislation to ensure that the list of obliged entities is sufficiently comprehensive and well‐defined and is in line with the international AML/CFT standards; examples of sectors that are not included or whose status under the current AML/CFT directive is unclear include virtual asset service providers, investment firms, and investment funds
- Clarify provisions in sectoral financial services legislation to ensure that they are compatible with the AML/CFT objectives of EU, for example, by ensuring that money laundering and terrorist financing risk is addressed consistently across all sectors and throughout the supervisory process
This response complements the response of EBA to the EC consultation on AML/CFT action plan, which advises on how to be effective and efficient in establishing a new EU AML/CFT supervisor by building on the existing AML/CFT infrastructure.
Keywords: Europe, EU, Banking, AML/CFT, Action Plan, ML/TF Risk, Single Rulebook, Operational Risk, Basel, EC, EBA
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