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EBA issues opinion on AML/CTF risks in the EU

The EBA highlights key money laundering and terrorist financing risks across the EU 

03 March 2021

The European Banking Authority (EBA) today published its biennial Opinion on risks of money laundering and terrorist financing (ML/TF) affecting the European Union’s financial sector. The ML/TF risks identified by the EBA include those that are applicable to the entire financial system, for instance the use of innovative financial services, while others affect specific sectors, such as de-risking. The list also includes ML/TF risks that emerge from wider developments such as the COVID-19 pandemic that has an impact on both firms’ AML/CFT compliance and competent authorities’ supervision. The Opinion, therefore, sets out recommendations to competent authorities aimed at closing these gaps.

Some of the risks identified in this Opinion, such as those associated with virtual currencies and innovative financial services, had already been identified in the previous two Opinions on ML/TF risks and continue to be very relevant today. Others are included in the Opinion for the first time, such as differences in the treatment by competent authorities of financial institutions’ involvement in facilitating or handling tax-related crimes (‘cum-ex/cum-cum’). The EBA also observes a continuing trend of de-risking, which has implications from a ML/TF, consumer protection and financial stability point of view.

The COVID19 pandemic illustrates how new ML/TF risks can emerge unexpectedly and that can impact firms’ ability to ensure adequate AML/CFT compliance, and competent authorities’ ability to ensure the ongoing supervision of firms in the current context of restrictions on movement. Risks associated with COVID19, thus, require immediate attention and monitoring by competent authorities.

As a complement to this Opinion, the EBA has developed an interactive tool, which gives European citizens, competent authorities and credit and financial institutions access in a user friendly manner to all ML/TF risks covered in the Opinion. The interactive tool is available here

Legal basis

The Opinion has been issued in accordance with Article 6(5) of (EU) 2015/849 (The Fourth EU Anti-Money Laundering Directive), which requires the EBA to issue an Opinion on the risks of ML and TF affecting the EU’s financial sector every two years. The Opinion and its associated report will inform the European Commission’s Supranational Risk Assessment (SNRA) and risk assessments carried out by competent authorities.

The opinion is pretty lengthy – 102 pages. Here’s the intro:

Introduction and legal basis
1. Article 6(5) of Directive (EU) 2015/8491 requires the EBA to issue an Opinion on the risks of money laundering and terrorist financing (ML/TF) affecting the European Union’s financial sector every two years.
2. This is the third Opinion on the risks of ML/TF affecting the European Union’s financial sector. The EBA is issuing this Opinion as part of its new mandate to lead, coordinate and monitor the fight against ML/TF in the financial system at the EU level. The European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA) were closely involved in the process.
3. The Opinion draws on information provided by competent authorities (CAs) and on information obtained in the context of the EBAs’ work, such as the attendance at AML/CFT colleges and the EBA’s AML/CFT implementation reviews.
4. As in its previous Opinion, the EBA looked at MLTF risks to which credit and financial institutions are exposed, as well as ML/TF risks that cut across various sectors. The EBA also carried out an assessment of how the ML/TF risks have evolved since the last Opinion was published in 2019.
5. This Opinion sets out proposed actions addressed to CAs, which are based on the detailed analysis and findings set out in the report annexed to the Opinion. The Opinion together with the report also serves to provide information for the European Commission’s Supranational Risk Assessment (SNRA) and risk assessments carried out by CAs.
6. The EBA competence to deliver an Opinion is based on Article 29(1)(a) of Regulation (EU) No 1093/2010 and on Article 6(5) of Directive (EU) 2015/849 and Article 16a(1) 29(1)(a) of Regulation (EU) No 1093/2010, as risks of ML/TF affecting the European Union’s financial sector relate to the EBA’s area of competence.
7. In accordance with Article 14(7) of the Rules of Procedure of the Board of Supervisors, the Board of Supervisors has adopted this Opinion.
8. Under Article 29(1)(a), the EBA has, where appropriate, to conduct open public consultations and a cost-benefit analysis (CBA) and request advice from the Banking Stakeholder Group (BSG). Consultation/CBA must be proportionate to the scope, nature and impact of the Opinion. In this instance, the EBA has not conducted an open public consultation and CBA and has not requested advice from the BSG because the suggestions made to CAs in this Opinion do not change or specify policies, but rather set out good practices and reiterate supervisory duties. In relation to the proposals addressed to the national competent authorities, they would mainly impact the authorities that have already contributed to the development of this Opinion, and so there was no need to seek their views through an open public consultation.
Links:

EBA Notice

EBA Opinion

Categories: Anti-Money Laundering European Banking Authority (EBA) Updates Guidance

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