The European Banking Authority (EBA) is proposing changes to its guidelines on risk-based supervision of financial institutions’ compliance with Anti-Money Laundering (AML) and Counter Terrorism Financing (CFT) obligations.

The regulatory agency yesterday published consultation paper on changes to address the “key obstacles” to effective AML/CFT supervision the EBA has identified during a recent review of its existing guidelines.

The EBA said that since guidelines on risk-based supervision were published in 2016, supervisors across the EU were finding the implementation of a risk-based approach “difficult”.

The consultation paper suggests changes to areas that competent authorities have found “particularly challenging”.

The new guidelines are designed to help supervisors identify and manage ML/TF risks more effectively, including risks that “may arise from de-risking practices in some sectors or Member States by providing greater detail on ML/TF risk assessments and by requiring to develop a robust supervisory strategy and plan that are based on those risk assessments.”.

The proposed guidelines also set out how supervisors can choose the most effective supervisory tools, stress the importance of co-operation with other stakeholders and “emphasis the importance for supervisors to develop a good understanding of ML/TF risks associated with tax crimes.”

The EBA said: “Once implemented, the proposed changes will 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. This means that they will significantly strengthen Europe’s AML/CFT defences.

The consultation will run until 17 June.


At-a-glance: revised EBA guidelines


The guidelines seek to:

  • emphasise the need for a comprehensive risk assessment at a sectoral and sub-sectoral level to support competent authorities’ identification of those risk areas that require more intense supervisory attention;
  • explain different supervisory tools available to competent authorities and provide guidance on selecting the most effective tools for different purposes;
  • emphasise the importance of a robust follow-up process and set out different aspects that competent authorities should consider when determining the most effective follow up action
  • provide further guidance on the implementation of a robust supervisory strategy and plan, to ensure that competent authorities allocate their supervisory resources according to the risk exposure of subjects of assessment under their supervision;
  • clarify competent authorities’ obligations as regards to the AML/CFT supervision of groups and emphasise the need for competent authorities, that are responsible for the supervision of the group’s head office, to develop a good understanding of ML/TF risks to which the group is exposed with a view to ensure that group-wide policies and procedures are implemented effectively;
  • highlight the importance of cooperation among competent authorities and between competent authorities and other stakeholders including prudential supervisors, the FIU, tax authorities, law enforcement and AML/CFT authorities in third countries. In particular, the guidelines recognise that supervisory cooperation is important not only when supervising cross-border groups, but also in respect of domestic groups and subjects of assessments.
  • provide further guidance on how competent authorities can determine the type of guidance needed within the sector and how to communicate this guidance in the most effective manner;
  • include further clarifications on the type of training that the competent authorities should provide to their staff.

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