The European Banking Authority (EBA) has recently commenced a public consultation aimed at reviewing and enhancing its existing guidelines concerning the identification and prevention of money laundering and terrorist financing risks. This inclusive initiative seeks to encompass Crypto-Asset Service Providers (CASPs) within its scope. Stakeholders will be provided with valuable insights into the significant money laundering and terrorist financing risks faced by CASPs and other financial institutions. The consultation period extends until 31st August 2023.
CASPs present a considerably elevated risk profile due to their utilisation of cutting-edge technologies, the facilitation of instant global transfers of crypto assets and incorporation of privacy-enhancing features. Recognising this, the EBA has put forth proposed amendments to establish a set of uniform regulatory expectations, focusing on effective risk identification and mitigation measures for CASPs as well as a generic emphasis on the need for secure remote onboarding tools to be put in place by credit and financial institutions.
The proposed changes include the introduction of new sector-specific guidance specifically tailored to CASPs. This guidance will outline various factors that may indicate a higher or lower exposure to money laundering and terrorist financing risks. CASPs are urged to incorporate these considerations into their initial and ongoing risk assessments of both their business operations and clientele. Furthermore, the guidelines will elucidate the adjustments CASPs should make to their customer due diligence (CDD) procedures to align with the identified risksand will additionally also provide guidance to other institutions engaging with CASPs or dealing with crypto assets, equipping them with a comprehensive understanding of the associated risks.
To further enhance the efficacy of anti-money laundering/countering the financing of terrorism (AML/CFT) supervision of CASPs, the EBA plans to issue amendments to its risk-based supervision guidelines. These amendments will include comprehensive guidance for AML/CFT supervisors of CASPs. Furthermore, supplementary guidelines will be developed to prevent the misuse of fund transfers for money laundering and terrorist financing purposes, as well as to provide comprehensive policies and procedures for compliance with restrictive measures.
Interested parties are encouraged to submit their comments on the consultation paper through the dedicated consultation page on the EBA’s official website. The deadline for submiting is 31st August 2023.
The EBA’s public consultation on the review of its money laundering and terrorist financing risk factors guidelines marks an important step towards strengthening the regulatory framework concerning CASPs and other financial institutions. By actively engaging stakeholders and incorporating their insights, the EBA aims to establish common expectations and guidelines that effectively address the evolving risks associated with crypto assets and innovative technologies. This collaborative effort will ultimately contribute to the prevention of money laundering and terrorist financing, ensuring the integrity and stability of the European banking system.
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EBA Public Consultation: Consultation paper on amending Guidelines on ML FT risk factors.pdf (europa.eu)