These Guidelines create, for the first time, a common understanding across EU Member States, of credit or financial institutions’ AML/CFT governance arrangements. They complement but do not replace relevant guidelines by the EBA on wider governance arrangements and suitability checks.
The Guidelines set clear expectations on the role, tasks and responsibilities of the AML/CFT compliance officer and the management body in relation to AML/CFT. They also specify that credit or financial institutions should appoint one member of their management body who will ultimately be responsible for the implementation of the AML/CFT obligations and clarify the tasks and functions of that person.
Update on EuReCA
Since the launch of the EBA’s new AML/CFT database ‘EuReCA’ (the European Reporting system for material AML/CFT weaknesses) on 31 January 2022, competent authorities have reported 98 ‘material weaknesses’, which relate to serious deficiencies that they have identified in individual financial institutions and 5234 measures they have taken to rectify those deficiencies.
Training for AML/CFT supervisors of the life insurance sector
In April 2022, we provided AML/CFT training to more than 100 supervisors responsible for the supervision of the life insurance sector in the EU. Mr. Patrick Hoedjes, Head of the Oversight Department at EIOPA and a member of the EBA’s AML/CFT Standing Committee, opened the session and provided an introductory speech.
This was followed by various presentations from AML/CFT experts on the main ML/TF risks to which the life insurance sector is exposed and the measures that obliged entities in this sector should put in place to mitigate these risks. We also addressed some of the main weaknesses that are most frequently identified in the AML/CFT policies, systems and controls of life insurance undertakings. The session ended with some interactive case studies to provide the participants with a more practical approach when addressing these weaknesses.
EBA’s response to the Call for Advice on the review of the PSD2
In June 2022, we published a response to the Call for Advice on the review of the Payment Services Directive (PSD2), which proposed to the European Commission several amendments to the Directive to address various issues identified by the EBA. The proposal aims, among others, to address issues related to the move from open banking to open finance, to clarify the application of strong customer authentication and other security requirements, to define the scope of the Directive and key terms, as well as to identify the interplay between PSD2 and other EU legal acts.
In relation to AML/CFT, the EBA proposed some amendments that would help address unwarranted de-risking practices by banks affecting payment and e-money institutions. It also reflects on the interplay between PSD2 and AMLD, in particular, it questions the inclusion of account information service providers as obliged entities under AMLD. The proposal suggests that certain aspects of the passporting regime should also be clarified, including the nature and status of agents and distributors of electronic money institutions.
Joint ESAs Report on the withdrawal of authorisation for serious breaches of AML/CFT rules
In June 2022, we published a joint Report, together withESMA and EIOPA, on the withdrawal of authorisation for serious breaches of AML/CFT rules. The report provides a comprehensive analysis on the completeness, adequacy and uniformity of the applicable laws and practices on the withdrawal of license for serious breaches of the AML/CFT rules.
It also lays down uniform criteria supervisors should use to assess the seriousness of a breach of AML/CFT rules.
In June 2022, the EBA published its 2021 Annual Report. The report summarises the EBA’s main achievements and key publications in 2021. On the AML/CFT side, it focusses on the building of the infrastructure in the EU to lead, coordinate and monitor AML/CFT supervision.
The report also indicates the EBA’s priorities for 2022, where fighting money laundering and terrorist financing remains high in the agenda with the launch of the EU’s first, central AML/CFT database named EuReCA in early 2022. Through its database the EBA now collects, structures, analyses and shares information from national authorities on AML/CFT weaknesses. The EBA will use that information proactively to ensure that ML/TF risks are addressed by competent authorities and financial institutions in a timely and effective manner.
Fernando Pires, Raphaelle Stremsdoerfer and Joana Neto from the EBA AML Unit are featured in the 2021 Annual Report with an interview on the establishment of EuReCA
Amongst the 2022 priorities is also the EBA’s contribution to shape the future EU AML/CFT landscape and, in particular, to the establishment of the EU’s new AML/CFT authority (AMLA).
Political agreement reached on the recast of the 2015 Funds Transfer Regulation and new EBA mandates
One year ago, the European Commission published an AML/CFT packageconsisting of 4 legislative proposals that once implemented will transform the Union’s legal and institutional AML/CFT framework.
One of these proposals is the recast of the 2015 Funds Transfer Regulation. This recast serves to bring the EU’s legal framework in line with the Financial Action Task Force (FATF) standards which extended the application of its Recommendation 16 to virtual asset service providers. It means that to ensure traceability, these entities, which will now be included in the regulatory perimeter by the Market in Crypto Assets Regulation, will have to include information about the originator and beneficiary of the crypto-assets transfers, just as PSPs/IPSPs currently do for wire transfers. This is known as the “travel rule”.
On 29 June 2022, the co-legislators reached a provisional agreement on this regulation where they have mandated the EBA to set regulatory expectations on key aspects of the new regime. For example, the EBA is required to develop guidelines on the application of the travel rule and also guidelines on the systems and controls payment and crypto-asset service providers should put in place to comply with restrictive measures. The EBA expects to develop the Guidelines during 2023.
Report on the functioning of AML/CFT colleges
On 1 September 2022, we published a second report on the Functioning of AML/CFT colleges in 2021. The report is based on data and information collected by the EBA from competent authorities or through EBA staff participation in AML/CFT college meetings.
In the report, the EBA sets out its observations of good practices observed in AML/CFT colleges. These include well structured and organised college meetings, pro-active participation and sharing of comprehensive information by some members and effective involvement of prudential supervisors in some colleges. The report also highlights areas for improvement. In particular, it points out that colleges are not yet fully embedded in supervisory processes and that colleges are not always used to exchange relevant information on an ongoing basis and without delays.
Coming up
Guidelines on effective ML/TF risk management and access to financial services (‘Anti-derisking Guidelines’)
As a follow-up from the EBA Opinion on de-risking (published in January 2022), the EBA is working on a new set of guidelines to tackle further the negative impact of de-risking and to strike the right balance between financial inclusion and compliance with the current EU AML/CFT framework.
De-risking can lead to adverse economic outcomes and can affect individuals who are particularly vulnerable. Financial exclusion is of particular concern for the EBA, as access to at least basic financial products and services is a prerequisite for participation in modern economic and social life.
The Guidelines will be published for public consultation later in 2022.
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