EBA AML/CFT Newsletter

In January 2022, the EBA launched EuReCA, its central anti-money laundering and countering the financing of terrorism (AML/CFT) database.

The EBA has now published a factsheet that summarises what EuReCA is, who reports into it and how the EBA uses information from EuReCA to foster an effective approach by EU supervisors to tackling financial crime risks in their sector. It also provides some statistics and examples from EuReCA’s first year.

In March, the EBA issued guidelines amending the ML/TF risk factors guidelines on the effective management of ML/TF risks and access to financial services', following a three -month consultation and a public hearing.

The purpose of the new guidelines is to ensure that customers have access to the financial services they need to fully participate in society and that they are not denied such access on unsubstantiated AML/CFT grounds or without a valid reason. The guidelines set common expectations of effective money ML/TF risk management practices in those situations.

In May, the EBA published and submitted the European Parliament and the Council its annual report to on the degree of convergence between supervisory practices.

The latest Report on supervisory convergence for 2022  highlights the efforts made by prudential supervisors to take ML/TF risks into account when conducting the Supervisory Review and Evaluation Process (SREP) assessment and the synergies developed between AML/CFT and prudential supervisory colleges. The EBA found that prudential supervisors had incorporated AML/CFT into their supervisory priorities in 2022 and followed up on AML/CFT-related concerns.

In May, the EBA initiated a public consultation on amendments to the Guidelines on MLK/TF risk factors. The proposed amendments extend the scope of the Guidelines to include crypto-asset service providers (CASPs) and highlight the ML/TF risks these providers should considered when carrying out risk assessments of their business or customers. The proposed amendments also include the risks that other credit and financial institutions should  consider when engaging in a business relationship with a CASP or when they are otherwise exposed to crypto assets.

The proposed amendments were necessary to fulfil  the mandates given to the EBA under the recast Transfer of Funds Regulation. The deadline for submission of comments in response to the consultation is 31 August 2023.

In June the EBA published the findings from its assessment of the scale and nature of ML/TF risks associated with payment institutions. It considered how payment institutions identify and manage ML/TF risks and what supervisors do to mitigate those risks when considering an application for the authorisation of a payment institution and during the life of a payment institution.

The sector consists of a heterogenous set of institutions of different sizes and business models, each carrying different levels of ML/TF risk. Nevertheless, the EBA’s findings suggest that overall, the sector does not manage ML/TF risk adequately. AML/CFT internal controls in payment institutions are often insufficient to prevent or detect ML/TF.

The EBA’s findings also suggest that not all competent authorities are currently doing enough to supervise the sector effectively. As a result, payment institutions with weak AML/CFT controls can operate in the EU, for example by establishing themselves in Member States where authorisation and AML/CFT supervision processes are less stringent to passport their activities cross-border afterwards.

In June the EBA published its latest Annual Report. The report highlights the EBA’s continued leading work to reduce the risk of financial crime within the EU.   

In 2022, this included consolidating the regulatory framework and preparing to deliver ten new mandates under the recast Regulation on the transfer of funds and crypto-assets; launching the central database, EuReCA; continuing in-depth reviews of competent authorities’ approaches to tackling ML/TF risk; building supervisory capacity and fostering cooperation and information exchange in AML/CFT colleges.