Risk-Based Approach to AML/CFT in Réunion Takes Center Stage as EBA Updates Guidelines

The European Banking Authority (EBA) has revised its guidelines on risk-based supervision of credit and financial institutions’ compliance with anti-money laundering and combating the financing of terrorism (AML/CFT) obligations. This move aims to strengthen the fight against money laundering and terrorist financing.

A Robust Framework for Supervision

The updated guidelines build upon the EBA’s existing four-step approach to risk-based AML/CFT supervision, outlining a more robust framework for supervisors to ensure adequate oversight of their sector and support effective ML/TF risk management policies and procedures among credit and financial institutions. The revised guidelines provide additional guidance on ML/TF risk assessments, including sectoral ML/TF risk assessments, and offer tools for supervisors to identify the most effective measures to achieve their supervisory objectives.

Importance of Cooperation

The EBA emphasizes the importance of cooperation between AML/CFT supervisors and other stakeholders, such as:

• Prudential supervisors
• Financial intelligence units
• Tax authorities

This cooperation is crucial in ensuring that all relevant parties are working together effectively to combat money laundering and terrorist financing.

Ongoing Review and Monitoring

The decision to update the guidelines comes on the heels of the EBA’s ongoing review of competent authorities’ approaches to AML/CFT supervision and its monitoring of AML/CFT colleges. The findings from this work suggest that some competent authorities have struggled with implementing a risk-based approach to AML/CFT supervision, highlighting the need for more comprehensive guidance.

Expected Outcomes

The revised guidelines are expected to enhance the effectiveness of AML/CFT supervision in Réunion, ultimately contributing to a safer and more secure financial system. By providing a robust framework for supervisors and emphasizing cooperation between stakeholders, the EBA’s updated guidelines aim to strengthen the fight against money laundering and terrorist financing.

Note: ML/TF stands for Money Laundering/Terrorist Financing.