Final and translated into the EU official languages
The revised Guidelines on risk-based supervision set out the steps supervisors should take to ensure adequate AML/CFT oversight of their sector and support the adoption, by credit and financial institutions, of effective ML/TF risk management policies and procedures. They aim at helping supervisors choose the most effective tools to meet their supervisory objectives.
The European Banking Authority (EBA) launched today a public consultation on amendments to its Guidelines on risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) supervision. The proposed changes extend the scope of these Guidelines to AML/CFT supervisors of crypto-asset service providers (CASPs). The consultation runs until 29 June 2023.
By its nature, the provision of crypto-asset services is a cross-border activity. That is why it is important that the same standards apply wherever CASPs operate in the single market. To achieve this, the EBA is proposing to amend its Guidelines on Risk-Based AML/CFT Supervision to clarify how they apply to AML/CFT supervisors of CASPs.
The amendments include guidance on the sources of information competent authorities should consider when assessing ML/TF risks associated with CASPs. They also highlight the importance of a consistent approach to setting supervisory expectations where multiple competent authorities are responsible for the supervision of the same institutions and stress the importance of training to ensure that staff from competent authorities have the technical skills and expertise necessary for the execution of their functions.
Specific AML/CFT guidance for CASPs will be delivered through the forthcoming amendments to the EBA’s Risk Factors Guidelines, the amendments to the Guidelines to prevent the abuse of fund transfers for ML/TF purposes, and new Guidelines on policies and procedures for compliance with restrictive measures. Through these products, the EBA continues its work to strengthen Europe’s AML/CFT defenses.
Comments to the consultation paper can be sent by clicking on the "send your comments" button on the EBA's consultation page. The deadline for the submission of comments is 29 June 2023.
The EBA will hold a virtual public hearing on the consultation paper on 7 June 2023 from 14:00 to 16:00 Paris time. The EBA invites interested stakeholders to register using this link by 5 June 2023 at 16:00 CEST. The dial-in details will be communicated to those who have registered for the meeting.
All contributions received will be published following the end of the consultation, unless requested otherwise.
The scope of the consultation, and of the consultation questions, is limited to the amendments and additions.
Directive (EU) 2015/849 puts the risk-based approach at the centre of Europe’s anti-money laundering and countering the financing of terrorism (AML/CFT) regime. The requirements in this Directive were complemented by the mandate given to the EBA under Article 48(10) of the same Directive requiring the EBA to issue guidelines to competent authorities on the characteristics of a risk‐based approach to AML/CTF supervision.
In July 2021, the European Commission published a legislative package with four proposals to reform the EU legal and institutional AML/CFT framework. One of these proposals, the recast Transfer of Funds Regulation, has already been agreed provisionally. The ‘Provisional Agreement Resulting from Interinstitutional Negotiations’ of 5 October 2022 (2021/0241 (COD)) includes a number of mandates for the EBA. One of these mandates, laid down in article 30(3) of the Provisional Agreement, requires the EBA to issue guidelines on the risk-based approach to AML/CFT supervision of crypto-asset service providers by competent authorities.
Once adopted, the Markets in Crypto-assets Regulation will bring crypto-asset services and activities within the EU regulatory scope. At the same time, CASPs will become subject to EU AML/CFT obligations and supervision. This will ensure that the AML/CTF regulatory and supervisory framework is aligned with international recommendations and that ML/TF risks associated with this sector are addressed and effectively managed.
The European Banking Authority (EBA) launched today a public consultation on changes to its Guidelines on Risk-Based Supervision of credit and financial institutions’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. The proposed changes address the key obstacles to effective AML/CFT supervision that the EBA has identified during its review of the existing Guidelines, including the effective use of different supervisory tools to meet the supervisory objectives. The Guidelines are central to the EBA’s mandate to lead, coordinate and monitor the EU financial sector’s fight against money laundering and terrorist financing. The consultation runs until 17 June 2021.
The Guidelines on risk-based AML/CFT supervision were originally published by the European Supervisory Authorities (ESAs) in 2016 and set out steps that competent authorities should take to ensure compliance by credit and financial institutions with their AML/CFT obligations. Since their publication, the EBA has observed that supervisors across the EU were finding the implementation of the risk-based approach to AML/CFT supervision difficult, which meant that AML/CFT supervision was not always as effective as the legal framework set out in Directive (EU) 2015/849 (AMLD) and the ESAs’ Guidelines had envisaged.
The changes the EBA is proposing include practical step-by-step approaches to addressing those aspects of AML/CFT supervision that competent authorities have found particularly challenging. The revised Guidelines focus on helping the supervisors identify and manage ML/TF risks more effectively, including the 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 Guidelines also set out how supervisors can choose the most effective supervisory tools to support different supervisory needs and objectives, and stress the importance of cooperation between different supervisory authorities, and between supervisors and other stakeholders, such as Financial Intelligence Units and financial institutions. In addition, the Guidelines emphasise the importance for supervisors to develop a good understanding of ML/TF risks associated with tax crimes, which may involve a cooperation with tax authorities in their Member State.
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.
Comments to the draft Guidelines can be sent by clicking on the "send your comments" button on the EBA's consultation page. The deadline for the submission of comments is 17 June 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise.
The EBA will hold a virtual public hearing on the draft Guidelines on 22 April 2021 from 14:00 to 16:00 Paris time. The dial-in details will be communicated to those who have registered for the meeting.
The scope of the EBA’s consultation is limited to the amendments and additions to the original risk-based supervision Guidelines, which will be repealed and replaced with the revised Guidelines.
Directive (EU) 2015/849 (AMLD) puts the risk-based approach at the centre of the EU’s AML/CFT regime. It recognises that the risk of money laundering and terrorist financing may vary between countries, sectors and financial institutions and that Member States, competent authorities and credit and financial institutions should identify and assess these risks in order to decide how to best manage them.
Article 48(10) of AMLD mandates the EBA to issue Guidelines addressed to competent authorities on the characteristics of a risk-based approach to supervision and the steps to be taken when conducting supervision on a risk-based basis. The mandate requires the EBA to take specific account of the nature and size of the business, and, where appropriate and proportionate, specific measures shall be laid down. The revised Guidelines also propose to take into consideration changes in the EU legal framework that came into force since the original guidelines were first issued, as well as new international guidance by the Financial Action Taskforce (FATF) and the Basel Committee on Banking Supervision on this topic.
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.
The European Banking Authority (EBA) published today its revised Guidelines on risk-based supervision of credit and financial institutions’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. The Guidelines set out the steps supervisors should take to ensure adequate AML/CFT oversight of their sector and support the adoption, by credit and financial institutions, of effective ML/TF risk management policies and procedures. The EBA decided to update and strengthen these Guidelines in light of the findings from its ongoing work to review competent authorities’ approaches to AML/CFT supervision. These findings suggest that some competent authorities found the implementation of the risk-based approach to AML/CFT supervision challenging.
The revised Guidelines build on the existing 4-step approach to the risk-based AML/CFT supervision and provide additional guidance on ML/TF risk assessments, including the sectoral risk assessment. They also help supervisors choose the most effective tools to meet their supervisory objectives, including in situations when they have identified breaches and weaknesses in institutions’ systems and controls framework and emphasise the importance of cooperation between AML/CFT supervisors and other stakeholders, including prudential supervisors, Financial Intelligence Units (FIUs) and tax authorities. This cooperation can happen, for example, in AML/CFT colleges, which are permanent structures that bring together AML/CFT supervisors to exchange information relating to institutions that operate on a cross-border basis in at least 3 Member States (AML/CFT colleges are further explained in the related factsheets).
Upon their entry into force, the Guidelines will foster greater convergence of supervisory practices across the EU and, as a result, will contribute to further strengthening Europe’s AML/CFT defences before the new legal framework enters into force.
Directive (EU) 2015/849 (AMLD) puts the risk-based approach at the centre of the EU’s AML/CFT regime. Article 48(10) of the AMLD mandates the EBA to issue guidelines addressed to competent authorities on the characteristics of a risk-based approach to supervision and the steps to be taken when conducting supervision on a risk-based basis.
The initial Guidelines on risk-based supervision were published by the European Supervisory Authorities (ESAs) in 2016. They created a common understanding of the risk‐based approach to AML/CTF supervision and, in particular, set out the steps that supervisors should take to carry out supervision on a risk-sensitive basis. Together with the ESAs’ ML/TF Risk Factors Guidelines, they transformed the way AML/CFT supervision was carried out in the EU. The revised Guidelines take into consideration changes in the EU legal framework that came into force since the original Guidelines were first issued, as well as new international guidance by the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision (BCBS) on this topic.
The EBA consulted on these Guidelines between March and June 2021. In its Special Report 2021/13 published in June 2021, the European Court of Auditors called for greater consistency in the AML/CFT approach to supervision and recognised the need to publish these guidelines as a matter of priority by the end of 2021.
The European Banking Authority (EBA) launched today a public consultation on changes to its Guidelines on Risk-Based Supervision of credit and financial institutions’ compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations. The proposed changes address the key obstacles to effective AML/CFT supervision that the EBA has identified during its review of the existing Guidelines, including the effective use of different supervisory tools to meet the supervisory objectives. The Guidelines are central to the EBA’s mandate to lead, coordinate and monitor the EU financial sector’s fight against money laundering and terrorist financing. The consultation runs until 17 June 2021.
The Guidelines on risk-based AML/CFT supervision were originally published by the European Supervisory Authorities (ESAs) in 2016 and set out steps that competent authorities should take to ensure compliance by credit and financial institutions with their AML/CFT obligations. Since their publication, the EBA has observed that supervisors across the EU were finding the implementation of the risk-based approach to AML/CFT supervision difficult, which meant that AML/CFT supervision was not always as effective as the legal framework set out in Directive (EU) 2015/849 (AMLD) and the ESAs’ Guidelines had envisaged.
The changes the EBA is proposing include practical step-by-step approaches to addressing those aspects of AML/CFT supervision that competent authorities have found particularly challenging. The revised Guidelines focus on helping the supervisors identify and manage ML/TF risks more effectively, including the 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 Guidelines also set out how supervisors can choose the most effective supervisory tools to support different supervisory needs and objectives, and stress the importance of cooperation between different supervisory authorities, and between supervisors and other stakeholders, such as Financial Intelligence Units and financial institutions. In addition, the Guidelines emphasise the importance for supervisors to develop a good understanding of ML/TF risks associated with tax crimes, which may involve a cooperation with tax authorities in their Member State.
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.
Comments to the draft Guidelines can be sent by clicking on the "send your comments" button on the EBA's consultation page. The deadline for the submission of comments is 17 June 2021.
All contributions received will be published following the close of the consultation, unless requested otherwise.
The EBA will hold a virtual public hearing on the draft Guidelines on 22 April 2021 from 14:00 to 16:00 Paris time. The dial-in details will be communicated to those who have registered for the meeting.
The scope of the EBA’s consultation is limited to the amendments and additions to the original risk-based supervision Guidelines, which will be repealed and replaced with the revised Guidelines.
Directive (EU) 2015/849 (AMLD) puts the risk-based approach at the centre of the EU’s AML/CFT regime. It recognises that the risk of money laundering and terrorist financing may vary between countries, sectors and financial institutions and that Member States, competent authorities and credit and financial institutions should identify and assess these risks in order to decide how to best manage them.
Article 48(10) of AMLD mandates the EBA to issue Guidelines addressed to competent authorities on the characteristics of a risk-based approach to supervision and the steps to be taken when conducting supervision on a risk-based basis. The mandate requires the EBA to take specific account of the nature and size of the business, and, where appropriate and proportionate, specific measures shall be laid down. The revised Guidelines also propose to take into consideration changes in the EU legal framework that came into force since the original guidelines were first issued, as well as new international guidance by the Financial Action Taskforce (FATF) and the Basel Committee on Banking Supervision on this topic.