Anti-money laundering and countering the financing of terrorism supervision of banks is improving, the EBA finds

Today, the European Banking Authority (EBA) published a Report that takes stock of the actions taken by all competent authorities to address the EBA’s findings and recommendations. This follows in - depth reviews carried out by the EBA of all 40 competent authorities approaches to tackling money laundering and terrorist financing (ML/TF) risks in banks in all EU/ EEA Member States over the last 6 years, issuing recommendations when necessary to improve the effectiveness of anti-money laundering and counter terrorism financing (AML/CFT) supervision.

Overall, competent authorities have made significant progress over the past six years in adopting a risk-based approach to AML/CFT supervision. Despite the challenges which, in some cases, hampered their reform efforts, most competent authorities now have dedicated AML/CFT strategies, targeted supervisory plans, and manuals that guide supervisors and ensure consistency across the sector. They are also cooperating more effectively with relevant stakeholders at both national and international level. Looking ahead, the new EU Anti-Money Laundering Authority (AMLA) will benefit from the EBA’s work that has been instrumental in making AML/CFT supervision in the EU more effective.

In relation to AML/CFT supervision, competent authorities have taken notable steps to align national strategies and practices with the EBA standards. The findings suggest that supervisory manuals have been enhanced to ensure that AML/CFT supervision becomes more consistent and effective, and that most supervisors have taken significant steps to use all supervisory tools available to them in a more strategic way. However, in several cases, work is still underway to address recommendations stemming from these reviews.

Competent authorities also made substantial efforts to strengthen coordination and information exchange with the relevant public authorities within their respective Member States, such as competent authorities with shared supervisory responsibilities, the financial intelligence unit and tax authorities. The Report also highlights significant progress in relation to establishing sound and effective communication with competent authorities in other EU jurisdictions or third countries. Nevertheless, in some Member States, further improvement is needed, for example in relation to effective cooperation mechanisms with prudential supervisors.

Legal basis, background and next steps

The EBA’s reviews of competent authorities’ approaches to tackling ML/TF risks in banks have been conducted in accordance with Articles 1, 8(1), 9a and 29(1) and (2) of the EBA Regulation, which confers on the EBA a duty to ensure effective and consistent supervisory practices, to contribute to the consistent and effective application of Union law and to contribute to preventing the use of the EU’s financial system for ML/TF purposes. To this effect, the EBA can carry out peer reviews and investigate potential breaches of Union law, and it can take other measures such as staff- led implementation reviews to assess competent authorities’ responses to specific compliance challenges.

This Report concludes the EBA’s multiannual project of reviews of competent authorities’ approaches to tackling ML/TF risk in banks. It provides AMLA with an up-to-date view of the state of AML/CFT supervision in the EU and forms a basis for indirect AML/CFT supervision that will fall to AMLA going forward.

The focus of this Report is on aspects related to AML/CFT supervision and cooperation, because the standards on risk assessment and enforcement will benefit from a higher degree of standardisation under the new EU AML/CFT framework.

This final Report as well as the four summary reports will be part of the EBA’s handover to AMLA.