Financial Crime World

Strengthening Anti-Money Laundering Frameworks in the Banking Sector

The European Parliament has taken significant steps to prevent money laundering in the banking sector since 2014. Building upon this work, several key points can be emphasized to further reinforce anti-money laundering (AML) and combating terrorist financing (CFT) frameworks:

Key Enhancements to AML/CFT Frameworks

Reinforcing Supervisory and Regulatory Framework

  • The European Banking Authority’s (EBA) mandate has been consolidated, granting it clear powers to prevent AML/CFT in the financial system.
  • The EBA can now conduct analysis of information collected, pursue investigations, request competent authorities to investigate breaches of rules, consider taking decisions, and impose sanctions on financial institutions.

Data Collection and Sharing

  • The EBA will become a “data-hub” on AML supervision, collecting information from national authorities on an ongoing basis, including weaknesses identified during ongoing supervision.
  • This enhanced data collection and sharing mechanism aims to improve the effectiveness of AML/CFT measures.

Independent Review and Risk Assessment

  • The EBA can conduct independent reviews of AML authorities and regularly perform risk assessments to identify areas of improvement.
  • These reviews will help ensure that national competent authorities are implementing AML/CFT rules effectively.

Facilitating Cooperation with Third Countries’ Authorities

  • The EBA will act as a facilitator in AML cases involving third countries’ authorities, promoting cooperation and convergence.
  • This collaboration will aid in the prevention of financial crime across borders.

Potential Next Steps

To build upon this work, several potential next steps can be considered:

Further Analysis of the EBA’s New Powers

  • Investigate how the EBA plans to exercise its new powers, particularly in terms of data collection and sharing, independent review, and risk assessment.
  • This analysis will provide insights into the effectiveness of the EBA’s enhanced mandate.

Assessment of Impact on Financial Institutions

  • Evaluate the potential impact of the EBA’s new powers on financial institutions, including any potential costs or benefits associated with increased supervision and regulation.
  • This assessment will help understand the practical implications of the EBA’s actions on the banking sector.

Comparison with International Standards

  • Compare the EU’s AML/CFT framework with international standards, such as those set by the Financial Action Task Force (FATF), to identify areas for improvement.
  • This comparison will aid in ensuring that the EU’s framework remains aligned with global best practices.

Monitoring of National Competent Authorities

  • Monitor how national competent authorities are implementing the amended ESA Regulation and ensuring compliance with AML/CFT rules.
  • This monitoring will help ensure that national authorities are effectively enforcing AML/CFT measures.

Evaluation of Effectiveness of EBA’s New Mandate

  • Assess the effectiveness of the EBA’s new mandate in preventing money laundering and combating terrorist financing, including any challenges or limitations encountered during implementation.
  • This evaluation will provide insights into the overall impact of the EBA’s enhanced role in AML/CFT.