The European Banking Authority (EBA) is tasked with fostering a common approach to help national competent authorities and financial institutions across the EU to tackle money laundering and terrorist financing (ML/TF). In March 2021, the EBA published its revised guidelines on money laundering and terrorist financing risk factors, addressed to both financial institutions and supervisory authorities.
The revision was deemed necessary based on the Commission and the EBA’s reviews which had highlighted challenges in the implementation and supervision of the risk-based approach to AML/CTF. The revision aims at strengthening financial institutions’ risk-based approaches and supporting the development of effective supervisory approaches to overcome divergences across Member-States.
Some of the key aspects focus on:
- the determination of factors that firms should take into consideration when assessing the ML/TF risk, associated with a business relationship or occasional transaction.
- instructions on how financial institutions can adjust their customer due diligence measures in order to mitigate the ML/TF risk.
- supporting competent authorities’ AML/CFT supervision during the determination of the adequacy of firms’ risk assessments and AML/CFT policies and procedures.
- instead of discontinuing services to the categories of consumers associated with high ML/TF risk, the EBA advices financial institutions to use the guidelines to balance the need for financial inclusion with the need to mitigate and manage ML/TF risk.
After the publication of the guidelines, competent authorities will have two months to report whether they comply with the guidelines, which will start to apply three months after their publication in all the EU official languages.
By Sofia Badari