EBA AML/CFT Newsletter

In December, we published our draft Regulatory Technical Standards (RTS) on a central database on AML/CFT in the EU, also known as the European reporting system for material CFT/AML weaknesses (EuReCA). This database will act as an early warning tool, helping competent authorities to take action before ML/TF risk materialise, and to coordinate their efforts to prevent and counter ML/TF in the Union.

The RTS specify the type of information competent authorities are to report, and how the information in EuReCa is collected, contained, analysed and disseminated. They also set out the rules necessary to ensure confidentiality, protection of personal data and the effectiveness of EuReCa. Once approved by the European Commission, the provisions in this regulation will be directly applicable in all Member States.

In December, we published our revised guidelines on the risk-based supervision of credit and financial institutions’ compliance with AML/CFT obligations. Building on the EBA’s existing 4-step approach to risk-based AML/CFT supervision, the revised guidelines 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 ML/TF risk management policies and procedures. They also provide additional guidance on ML/TF risk assessments, including sectoral ML/TF risk assessment. Finally, they 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 emphasise the importance of cooperation between AML/CFT supervisors and other stakeholders, including prudential supervisors, FIUs and tax authorities.

The EBA decided to update and strengthen these guidelines in light of the findings from its ongoing work to review competent authorities’ approaches to AML/CFT supervision and to monitor AML/CFT colleges. These findings suggest that some competent authorities found the implementation of the risk-based approach to AML/CFT supervision challenging.

In December, we published two factsheets on AML/CFT colleges.

One factsheet explains the overall AML/CFT colleges framework, which is set out in the ESA’s guidelines. The other factsheet explains how we monitor AML/CFT colleges, and how we select AML/CFT colleges that we will then monitor closely, i.e. those institutions that pose the highest ML/TF risks. When identifying the colleges to closely monitor, we also take into account the need to ensure a broad geographical spread, coverage by sector and the strategic importance of specific institutions in some regions and Member States.

In addition to active monitoring, from January 2022, we will also carry out thematic monitoring of colleges in certain sectors, and general monitoring of all colleges.

We are currently finalising our revised guidelines on common procedures and methodologies for the supervisory review and evaluation process (SREP).

The revised guidelines will reflect changes to the EU’s legal framework. They will also set out how prudential supervisors should take ML/TF risks into account in SREP, in line with the EBA's Opinion on ML/TF risks in SREP.

The final revised SREP guidelines are aimed to be published by end of March 2022.

The consultation is open until 10 March 2022.

The EBA will hold a virtual public hearing on the draft guidelines on 24 February 2022 from 11:00 to 12:30 Paris time. Registration is open on our website.

We will publish an Opinion on the scale and impact of de-risking in the EU in early 2022.

In 2020-21 we conducted a series of information gathering exercises, reaching out to all relevant competent authorities across the EU, as well as to external stakeholders to assess the scale and impact of de-risking across the EU and to better understand why institutions decide to de-risk particular categories of customers instead of managing the risks associated therewith. We consolidated the findings and identified a number of steps for competent authorities and the European Commission and co-legislators to tackle unwarranted de-risking going forward.

The European Reporting system for material AML/CFT weaknesses (EuReCA) will be central to coordinating efforts to prevent and counter money laundering and terrorist financing (ML/TF) in the Union.

EuReCA will start collecting data in Q1 2022.

We will soon be publishing our findings of this year’s implementation reviews. Implementation reviews are staff-led assessments of competent authorities’ approaches to AML/CFT supervision. Our first report is available on our website.

In February 2021, as part of a broader call for advice on digital finance, the European Commission requested the EBA to provide technical advice on non-bank lending.

We will provide our view on the need to adjust the EU regulatory perimeter, including in relation to AML/CFT. The final report will be published in Q1 2022.