EBA AML/CFT Newsletter

Competent authorities that are legally required to report to EuReCA include not only AML/CFT authorities but also prudential authorities, resolution authorities, deposit guarantee schemes, conduct of business authorities and payments institutions authorities. In return, these authorities can obtain data from EuReCA by submitting ‘reasoned requests’ to inform their supervisory activities. The EBA also shares information from EuReCA with competent authorities, as necessary.

By 1 December 2022, EuReCA had received 303 submissions from competent authorities. The serious deficiencies, or ‘material weaknesses’, reported by competent authorities are mainly about credit and payment institutions, but reports were submitted in respect of financial institutions in all sectors.

On 29 June 2022 the co-legislators reached a provisional agreement on the revised TFR. According to this agreement, the EBA will be assigned 10 legislative mandates on different aspects of the TFR. The new mandates include:

• guidance on the steps crypto assets service providers (CASPs) need to take to comply with the TFR,
• the AML/CFT supervision of CASPs,
• the systems and controls payment service providers and CASPs have to put in place to comply with restrictive measures (financial sanctions) regimes.

The EBA has started to work on these mandates. It also issued a call for input to identify practical issues that the industry experienced when complying with the 2017 Joint Guidelines to prevent the abuse of fund transfers for ML/Tf purposes. The call for input closed on 15 November 2022.

In November, the EBA published the final Guidelines on remote customer onboarding. The Guidelines establish common EU standards on the development and implementation of sound, risk-sensitive initial customer due diligence policies and processes in the remote customer onboarding context. They set out the steps credit and financial institutions should take to ensure safe and effective remote customer onboarding practices in line with applicable AML/CFT legislation and the EU’s data protection framework.

The Guidelines apply to all credit and financial institutions that are within the scope of the Anti-money Laundering Directive (AMLD).

In October, the EBA published the European Supervisory Examination Programme (ESEP) for 2023. The ESEP sets priorities for prudential supervisors across the EU. One of ESEP’s four priorities relates to financial crime. Accordingly, supervisors are expected to consider ML/TF risks from a prudential perspective and to verify that institutions’ internal control and governance frameworks are sufficient to enable them to comply with financial sanctions.

In December, following up on its Opinion on de-risking, the EBA launched a public consultation on new Guidelines to tackle de-risking. The consultation covers two set of Guidelines.

The first set consists of a new section to the EBA’s ML/TF risk factors Guidelines dedicated to not-for-profit organisations and set out what financial institutions should do to identify and tackle ML/TF risk associated with these customers.

The second set are new Guidelines, which clarify the interaction between access to financial services and institutions’ AML/CFT obligations, particularly in situations where customers, including the most vulnerable such as refugees and homeless people, have legitimate reasons to be unable to provide traditional forms of identity documentation.

The consultation is open until 6 February 2023 and a public hearing will be held 10 January 2023.

The EBA is carrying out a peer review on the authorisation of payment institutions (PIs) and electronic money institutions (EMIs) under the Payment Services Directive.

The peer review assesses supervisory practices across the EU in the authorisation of PIs and EMIs including the implementation of the EBA Guidelines on the information to be provided for the authorisation of PIs and EMIs and for the registration of account information service providers under PSD2. It will also identify shortcomings, good practices and provide targeted recommendations to competent authorities with the overall aim to further strengthen consistency and convergence of the assessment of applications for authorisations of PIs and EMIs across Europe.

The report will be published in early 2023.

We’d like to thank you for your interest in our work and wish you and your dear ones a joyous end of the year and a great beginning of 2023.

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