Financial Crime World

Strengthening Anti-Money Laundering and Combating the Financing of Terrorism Measures

Financial institutions must strengthen their compliance management policies and procedures to ensure effective implementation of anti-money laundering (AML) and combating the financing of terrorism (CFT) measures. The European Banking Authority (EBA) has issued new guidelines on AML/CTF compliance officers, which came into force on December 1, 2022.

Guidelines for Financial Institutions

According to the guidelines, financial institutions must:

  • Appoint a compliance officer at the management level and identify which member of the management body is ultimately responsible for implementing AML/CFT measures.
  • Verify document authenticity and reproduction integrity when possible.
  • Interrupt and restart or redirect remote customer onboarding processes if there is ambiguity or uncertainty.
  • Ensure that all remotely onboarded customers fulfill relevant requirements in cases where customer due diligence is outsourced to a third party.

Key Responsibilities

The management body, also known as the Risk Review (RR), has several key responsibilities:

Management Body Responsibilities

  • Supervise and oversee the implementation of internal governance and control mechanisms.
  • Ensure that AML/CFT policies and procedures are up-to-date and implemented effectively.
  • Monitor compliance and recommend corrective measures.
  • Report to senior management on ML/TF risk assessment, resources, policies, and procedures.

The AML/CFT compliance officer is responsible for:

AML/CFT Compliance Officer Responsibilities

  • Developing and implementing policies and procedures.
  • Consulting on customer onboarding or maintenance.
  • Monitoring compliance.
  • Reporting to the management body.
  • Ensuring adequate training and awareness on ML/TF methods.

Group Level Organization

At a group level, financial institutions must:

Group Level Responsibilities

  • Ensure that each branch or entity has the required knowledge and data to perform its duties.
  • Perform a cartography of ML/TF risks.
  • Establish remediation actions in case of ML/TF risks.
  • Set up a specific body dedicated to AML/CFT duties, coordination structure, group policies, and procedures.

New Proposal for a Directive on Criminal Offences and Penalties

A new proposal for a directive on criminal offences and penalties has been put forward by the European Parliament and Council. The aim of the directive is to:

Objectives

  • Ensure that EU sanctions and restrictive measures are properly enforced across the EU in a standardized fashion.
  • Discourage attempts to evade or circumvent these measures.

The proposed directive includes:

Key Provisions

  • A list of definitions of offences broadened to cover the circumvention of EU sanctions.
  • Penalties for natural persons.
  • Common basic standards for penalties for legal persons.