Anti-money laundering and countering the financing of terrorism supervision is improving but not always effective yet, finds the EBA

The EBA published today the findings from its assessment of competent authorities’ approaches to the anti-money laundering and countering the financing of terrorism (AML/CFT) supervision of banks. Since the EBA started those reviews in 2019 and strengthened its AML/CFT guidance, national supervisors have started to adopt meaningful reforms to improve their AML/CFT supervision, but the EBA found that significant challenges remain in important areas such as the identification and assessment of money laundering and terrorist financing (ML/TF) risks.

The EBA found that most competent authorities in its sample were committed to strengthening their approach to AML/CFT supervision. Several competent authorities took steps to put in place a holistic approach to tackling ML/TF risks in their banking sector and changes introduced after the recent transposition of relevant EU legislation, such as greater enforcement powers, have started to make a difference. Furthermore, AML/CFT teams in almost all competent authorities that the EBA reviewed have grown significantly and are set to expand further, and cooperation with prudential supervisors and other EU AML/CFT supervisors has become a clear priority for all, in line with the EBA’s regulatory framework.

Among the common challenges that supervisors face, the EBA highlights difficulties in (i) identifying ML/TF risks in the banking sector and in individual banks; (ii) translating ML/TF risk assessments into risk-based supervisory strategies; (iii) using available resources effectively, including by ensuring sufficiently intrusive onsite and offsite supervision; and (iv) taking proportionate and sufficiently dissuasive enforcement measures to correct AML/CFT compliance weaknesses. The EBA also found that cooperation with Financial Intelligence Units (FIUs) was not always systematic and often ineffective. These challenges have hampered the implementation of an effective risk-based approach to AML/CFT supervision.

Notes to the editors

• The EBA’s implementation reviews are in-depth, qualitative assessments of competent authorities’ approaches to the AML/CFT supervision of banks.
• The purpose of the implementation reviews is to support individual competent authorities’ AML/CFT efforts, and to strengthen the EU’s AML/CFT supervisory framework by sharing overall findings and recommendations on a regular basis.
• The first round of reviews took place from 2019 to 2020 and the second one from 2020 to 2021. Seven competent authorities from five EU/EEA Member States were assessed in the first round of reviews, and seven competent authorities from seven EU/EEA Member States were assessed during the second round.
• Round 3 of the implementation reviews is now underway. EBA staff are following up with competent authorities that were part of the first and second round of reviews to understand the steps they have taken since the review to strengthen their approaches to AML/CFT supervision.