Financial Crime World

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European Banks Embark on Enhanced AML/CFT Frameworks

In a move to strengthen anti-money laundering (AML) and combating the financing of terrorism (CFT) frameworks, several European banks have adopted revised guidelines for risk-based supervision.

Improving Risk-Based Supervision

The updated guidelines aim to enhance competent authorities’ understanding of money laundering and terrorist financing risks within their jurisdictions. The revisions come after the European Banking Authority (EBA) identified weaknesses in the current framework, including a lack of sectoral risk assessments and inconsistent approaches to risk assessment.

Amendments to Guideline 4.2: Identification of Risk and Mitigating Factors

  • Emphasize the importance of sectoral risk assessments
  • Encourage competent authorities to identify specific risk factors within their sectors and subjects of assessment
  • Refer to the EBA’s AML/CFT Risk Factors Guidelines to inform their views

Amendments to Guideline 4.3: Risk Assessment

  • Stress the need for a clear understanding of ML/TF risks in each Member State, as required by Article 48(6) of Directive (EU) 2015/849
  • Urge competent authorities to conduct robust risk assessments, which will serve as the basis for their risk-based approach

Amendments to Guideline 4.4: Supervision

  • Introduce a clear distinction between individual and sectoral/subsectoral risk assessments
  • Emphasize the importance of understanding ML/TF risks associated with groups
  • Highlight the need for supervisors to develop effective risk-based supervisory strategies and allocate resources accordingly

Amendments to Guideline 4.5: Monitoring and Updating of the RBS Model

  • Review and update the approach, including risk assessments and methodology, as well as supervisory strategy and plans
  • Identify inconsistencies or weaknesses and make adjustments where necessary

These amendments aim to strengthen AML/CFT frameworks across Europe, enhancing the ability of competent authorities to identify and mitigate ML/TF risks within their jurisdictions. The revised guidelines reflect the latest guidance from the Financial Action Task Force (FATF) and the EBA’s findings on the weaknesses in the current framework.

By adopting these revised guidelines, European banks can better protect themselves against ML/TF risks, ensuring a safer and more secure financial environment for all stakeholders.