EBA consults on revised guidelines on money laundering and terrorist financing risk factors
The European Banking Authority has issued a public consultation on revised money laundering and terrorist financing (ML/TF) risk factor guidelines as part of a broader communication on AML/CFT issues.
This update takes into account changes to the EU Anti Money Laundering and Counter Terrorism Financing (AML/CFT) legal framework and new ML/TF risks, including those identified by the EBA’s implementation reviews. These Guidelines are central to the EBA’s work to lead, coordinate and monitor the fight against money laundering and terrorist financing, explained in the accompanying factsheet. The consultation runs until 5 May 2020.
These Guidelines, which are addressed to financial institutions and supervisors, set out factors that institutions should consider when assessing the ML/TF risk associated with a business relationship or occasional transaction. In addition, they provide guidance on how financial institutions can adjust their customer due diligence measures to mitigate the ML/TF risk they have identified. Finally, they support competent authorities’ AML/CFT supervision efforts when assessing the adequacy of firms’ risk assessments and AML/CFT policies and procedures.
In its revised version, the EBA is proposing key changes, including new guidance on compliance with the provisions on enhanced customer due diligence related to high-risk third countries. New sectoral guidelines have been added on crowdfunding platforms, corporate finance, payment initiation services providers (PISPs) and account information service providers (AISPs) and for firms providing activities of currency exchanges offices.
The revised Guidelines also provide more details on terrorist financing risk factors and customer due diligence (CDD) measures including on the identification of the beneficial owner, the use of innovative solutions to identify and verify the customers’ identity. In addition, they set clear regulatory expectations of firms’ business-wide and individual ML/TF risk assessments.
The proposed changes will significantly strengthen Europe’s AML/CFT defences and foster greater convergence of supervisory practices in areas where supervisory effectiveness has been hampered, so far, by divergent approaches in the implementation of the same European legal requirements.