EBA assessment of AML/CFT supervision

The EBA has just published the findings from its assessment of competent authorities’ approaches to the AML/CFT supervision within their respective banking sectors.

Since the EBA started those reviews in 2019 and strengthened its AML/CFT guidance, meaningful reforms to improve AML/CFT supervision have been adopted by national supervisors. However, the EBA found that significant challenges remain in important areas such as the identification and assessment of ML/TF risks.

We are pleased to summarize the various points here below.

General findings:

• most authorities were committed to strengthening their approach to AML/CFT supervision
• several authorities took steps to put in place a holistic approach to tackling ML/TF risks in their banking sector and introduced appropriate changes following the recent transposition of relevant EU legislation
• AML/CFT teams in almost all competent authorities have grown significantly and are set to expand further
• cooperation with prudential and other EU AML/CFT supervisors has become a clear priority for all.

As for challenges and shortcomings, the EBA highlights the following key points:

• identifying ML/TF risks in the banking sector and in individual banks
• translating ML/TF risk assessments into risk-based supervisory strategies
• using available resources effectively, including by ensuring sufficiently intrusive onsite and offsite supervision
• taking proportionate and sufficiently dissuasive enforcement measures to correct AML/CFT compliance weaknesses
• cooperation with Financial Intelligence Units (FIUs) was not always systematic and often ineffective.

As these points have hampered the implementation of an effective risk-based approach to AML/CFT supervision, the EBA has recommended that competent authorities

1. on a domestic level, continue to work with different domestic authorities, such as the FIU, law enforcement, tax authorities, and where applicable, the public prosecutor and
2. on an international level, put in place international supervisory cooperation strategies to engage proactively and reactively with competent authorities in the EU and third countries.

Overall, despite these challenges, the EBA found that most competent authorities were on track and committed to strengthening their approach to AML/CFT supervision.

Our Regulatory Watch is closely monitoring the efforts by the EBA in this respect, as well as the implementation of formalised guidelines. No direct changes to our services are needed for the moment.

The guidelines, however, could trigger new regulations, revised regulations, and/or reporting needs. We will keep you informed on any changes in this respect and how this may affect our services.

As these efforts are ongoing, the EBA does not provide any deadlines or specific dates for any of their forthcoming actions pertaining or not, to the above.