The European Banking Authority (EBA) has recently published the findings from its fourth and final round of reviews of competent authorities’ approaches to tackling money laundering and terrorist financing (ML/TF) risks in the banking sector. With this round, the EBA has now assessed all competent authorities that are responsible for the AML/CFT supervision in thirty EU/EEA member states.
The EBA’s findings indicate that anti-money laundering and counter terrorism financing (AML/CFT) supervisors have taken important steps to implement a risk-based approach to AML/CFT and, since the first round of reviews in 2018, the EBA has seen significant developments in competent authorities’ approaches to supervision. The Report highlights good practices, for example in relation to cooperation and risk assessments, which reflect the positive changes in supervisory approaches.
Nonetheless, the EBA continued to find weaknesses in competent authorities’ risk assessment methodologies and enforcement processes not being fully effective or deterrent. Additionally, the EBA found divergent approaches in the way prudential supervisors consider and address ML/TF risks. In the absence of AML/CFT colleges, cooperation was limited, and it was still lacking with tax authorities. The EBA, therefore, recommended actions tailored to each competent authority to support their approach.
Overall, while the EBA continued to identify issues and shortcoming in this last round of reviews, the progress made since the first round suggests that the effectiveness of AML/CFT supervision will facilitate the effective implementation of the new AML/CFT package. This is the result of the actions taken by competent authorities following the EBA’s recommendations.
Legal basis, background and next steps
The EBA’s implementation reviews have been conducted in accordance with Articles 1, 8(1), 9a and 29(1) and (2) of the EBA Regulation, which confers on the EBA a duty to ensure effective and consistent supervisory practices, to contribute to the consistent and effective application of Union law and to contribute to preventing the use of the EU’s financial system for ML/TF purposes. To this effect, the EBA can carry out peer reviews and investigate potential breaches of Union law, and it can take other measures such as staff- led implementation reviews to assess NCAs’ responses to specific compliance challenges.
The EBA assessed all competent authorities that are responsible for the AML/CFT supervision in thirty EU/EEA MS.
The EBA will conduct a final review in 2025 of all the actions taken by competent authorities to take stock of the current state of AML/CFT supervision of banks and publish a final report as part of the EBA’s handover to AMLA.
