"EBA AML/CFT Newsletter" Newsletter Issues

EBA publishes first AML/CFT Q&As (17/12/2020)

In July, we expanded the scope of our Questions and Answers (Q&A) process and tool to enable external stakeholders to submit questions to the EBA about the interpretation and application of the Anti-Money-Laundering Directive and the legal instruments we have issued in its support. In October, we published our first Q&As on EU Delegated Regulation 2019/758. These particular Q&As were about the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing risk in certain third countries.

EBA publishes Opinion on tackling ML/TF risks as part of the SREP context (17/12/2020)

In November, we fulfilled another objective of the 2018 EU Council Action Plan on AML/CFT, by issuing an Opinion that sets out how prudential supervisors should consider money laundering and terrorist financing (ML/TF) risks in the context of the prudential Supervisory Review and Evaluation Process (SREP). We stressed the need for prudential supervisors to develop a sufficient understanding of ML/TF risks to enable them to identify these risks and related prudential concerns and gave examples how to do so. We also expect prudential supervisors to cooperate effectively and in a timely manner with AML/CFT supervisors to exchange information on ML/TF risks and to assess the implication of those risks for the safety and soundness of the institutions they supervise.

EBA sets out how to mitigate ML/TF risks during bank failures (17/12/2020)

In December, we published an Opinion on the interplay between the AMLD and the Deposit Guarantee Schemes Directive.

EBA publishes first ever AML/CFT colleges report (17/12/2020)

In December, we published our first report on the functioning of AML/CFT colleges. This report summarises examples of good and poor practice that the EBA observed, and makes recommendations to competent authorities to contribute to the effective operation of AML/CFT colleges going forward.

Over the last year, competent authorities in the EU have begun to set up regular, formal meetings of the supervisory authorities that are responsible for the AML/CFT supervision of the same financial institution as required by the ESAs’ AML/CFT colleges Guidelines. 10 such colleges have been set up so far. The EBA is a member of all colleges and provides technical support to competent authorities as appropriate.

Risk assessments of competent authorities (17/12/2020)

In December, we published the methodology we will use to carry out risk assessments, which is a new power we have received in January 2020 under Article 9a of our founding Regulation.

We will use 9a risk assessments to understand how well equipped competent authorities are to tackle emerging ML/TF risks, and to ensure that those risks are managed in a timely, effective and coordinated manner across the single market.

The FinCen Files – implications for financial institutions and their AML/CFT supervisors (17/12/2020)

Over the last months, there have been a number of media reports relating to the unlawful disclosure of suspicious transaction reports (STRs) that were submitted to the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCen). FinCen is the US Financial Intelligence Unit (FIU) responsible for collecting and analysing reports from obliged entities, including financial institutions. As with other reports from multiple mainstream media that relate to ML/TF, and in line with the risk-based approach set out in Directive (EU) 2015/849 (AMLD), financial institutions and competent authorities responsible for supervising these institutions’ compliance with their AML/CFT obligations in the EU should consider the impact of information contained in these reports on their work and take steps to address any ML/TF risks they have identified.

AML/CFT training for supervisors (17/12/2020)

The EBA is providing training to EU supervisors that have recently joined national competent authorities or are new to AML/CFT. This event will introduce participants to the legal and institutional AML/CFT framework in the European Union, and provide an overview of the tools supervisors in the EU have at their disposal to prevent the use of the EU’s financial system for ML/TF purposes. The training will take place on 15 February 2021 and is open to staff from EU competent authorities in the financial services sector.

Investigating the use of RegTech solutions in the AML/CFT context (17/12/2020)

We carried out a survey of financial institutions to understand how they use RegTech solutions to comply with their legal and regulatory obligations, including in relation to AML/CFT. We are now looking to understand in more detail the obstacles that prevent the development, implementation and roll-out of effective and cost-efficient RegTech solutions. Findings from this study will inform our work on RegTech. They will also help us take forward our work on guidelines on remote customer identification, which the European Commission asked us to prepare in the context of its Digital Finance Strategy.

All the best for 2021 (17/12/2020)

The EBA responds to the EU Commission’s Call for Advice on the future EU AML/CFT framework (07/09/2020)

In September, we responded to the EU Commission’s Call for Advice on ‘defining the scope of application and the enacting terms of a regulation to be adopted in the field of preventing money laundering and terrorist financing’.

In our advice, we set out how the EU’s legal framework should be amended to tackle vulnerabilities linked to divergent national approaches and gaps in the EU’s AML/CFT defences. We recommend that the Commission establish a single rulebook with a robust set of common rules that support the implementation of a proportionate and effective risk-based EU AML/CFT regime.

The EBA assesses the drivers, scale and impact of de-risking (09/09/2020)

Financial institutions have to put in place and maintain policies and procedures to comply with their legal obligations. These include policies and procedures to identify and manage risks associated with money laundering and terrorist financing. Where a financial institution considers that it cannot effectively manage those risks, it may decide to restrict access to or withdraw from providing a particular financial product or service, or servicing a particular customer or category of customers. This is referred to as ‘de-risking’.

In June, we launched a call for input to understand the drivers, scale and impact of derisking. We also hosted a virtual panel in September on the impact of de-risking on civil society.

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The EBA extends its Q&A tool to the AMLD (07/09/2020)

In July, we expanded the scope of our Questions and Answers (Q&A) process and tool to enable external stakeholders to submit questions on the Anti-Money-Laundering Directive and the legal instruments we have issued in its support. Submitted questions and our answers will be published on our website.

This tool is open to all. You can submit your question here.

The EBA launches consultation on revised guidelines on internal governance (31/07/2020)

In July, we launched a public consultation on changes to our Guidelines on internal governance. Our proposed amendments reflect new provisions in the CRDV and IFD, and include guidance on the steps institutions should take to ensure that ML/TF risks are addressed as part of their internal governance arrangements and risk management frameworks.

EBA and ESMA consult on revised fit and proper guidelines (31/07/2020)

In July, we launched a public consultation on changes to the joint EBA/ESMA Guidelines on the assessment of the suitability of members of the management body and key function holders of credit institutions, financial and mixed financial holding companies and investment firms. The revised guidelines set out how competent authorities and institutions should take into account ML/TF risks when assessing a person’s fitness and propriety at application, and on an ongoing basis where they have reasonable grounds to suspect that an institution has been involved in ML/TF.

The public consultation is open until 31 October 2020.

Understanding the uses and limitations of RegTech solutions (12/08/2020)

We are carrying out a survey of financial institutions to understand how they use RegTech solutions to comply with their legal and regulatory obligations, including in relation to AML/CFT. We will use responses to this survey to map activity in this area, identify barriers and risks related to the use of RegTech solutions and assess what we can do to facilitate the adoption and scaling up of RegTech solutions across the EU.

We are particularly interested in responses from financial institutions that are using, or are in the process of developing, RegTech solutions to monitor business relationships or transactions for AML/CFT purposes. We would also like to hear from ICT third party providers that are offering or developing such solutions.

Update on actions taken in response to COVID-19 and associated ML/TF risks (07/09/2020)

At the end of March, the EBA issued a statement on actions to mitigate financial crime risks in the context of the COVID-19 pandemic. We called on competent authorities to adapt the use of their supervisory tools temporarily to ensure ongoing compliance by credit and financial institutions with their AML/CFT obligations.

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Finalising the Risk Factors Guidelines (07/09/2020)

Our consultation on changes to the Risk Factors Guidelines closed in July. We received 58 responses, and feedback from more than 100 participants at our public hearing in June.

We are now assessing the feedback we received.

Consultation responses can be accessed on our website.

Digital platforms industry survey (09/09/2020)

In 2020/21, the EBA is analysing the use of digital platforms for the marketing, distribution and conclusion of contracts for banking, payments, e-money and credit products and services in the EU. This forms part of our thematic work on FinTech and our ongoing monitoring of the regulatory perimeter. In this context, we will be soon launching a survey of industry participants to understand how they are using, or expecting to use, digital platforms. As part of this wider industry outreach, we are interested in any ML/TF risks or opportunities identified. The EBA will publish in mid-2021 a report setting out the findings from its work on digital platforms.

FinCen Leaks (22/09/2020)

We have taken note of the publication of articles based on Suspicious Activity Reports that were submitted to the US Financial Crimes Enforcement Network (the so-called ‘FinCen leaks’). We will be looking at the implications for supervisors and financial institutions in the EU.