EBA opinion on ML/ TF risks affecting the EU financial sector, EBA revised Guidelines on ML/ TF risk factors

EBA opinion on money laundering and terrorist financing risks affecting the EU financial sector

The EBA published its opinion on the ML/TF risks that are affecting the EU's financial sector. This opinion sets out suggested actions addressed to national competent authorities (NCAs), based on the findings set out in the report annexed to the opinion. The opinion and report provide information for the European Commission’s Supranational Risk Assessment (SNRA) and risk assessments carried out by NCAs. Chapter 4.6 of the report covers collective investment undertakings/ fund managers in terms of inherent risks, quality of controls, supervisory activities, breaches identified, overall risk profile, emerging risks. In summary:

  • the sector presents a moderately significant inherent risk profile
  • the sector's exposure to cross-border transactions is of concern
  • some controls are assessed as being poor, such as those related to transaction monitoring and STR reporting
  • many NCAs had not assessed controls related to either the adequacy or the effectiveness of governance structures
  • overall supervisory activity within this sector remains relatively low
  • EBA invites NCAs to consider how best to address the identified weaknesses, possibly by thematic or targeted reviews (the EBAs' Risk-based Supervision Guidelines are currently being revised)
  • NCAs should increase their supervisory focus on governance
  • NCAs should consider whether cross-border risks are appropriately captured and given adequate weighting in their risk assessment of the sector

The EBA has issued the opinion as part of its new mandate to lead, coordinate and monitor the fight against ML/TF in the EU financial system. The EBA's role and mandate on AML/CFT is explained in a factsheet. The EBA published an interactive tool which aims to provide access the ML/TF risks covered in the opinion.

EBA revised Guidelines on ML/ TF risk factors

The EBA published Guidelines on ML/TF risk factors. These guidelines replaced the 2017 ESA guidelines on customer due diligence and the factors credit and financial institutions should consider when assessing the money laundering and terrorist financing risks associated with individual business relationships and occasional transactions. The EBA strengthened the requirements on individual and business-wide risk assessments and customer due diligence (CDD) measures, with additional guidance on the identification of beneficial owners, the use of innovative solutions to identify and verify customers' identities, and how firms should comply with requirements for enhanced CDD related to high-risk third countries. The guidelines applied from  7 October 2021. Funds and fund service providers are likely to reflect the guidelines in their AML/CTF policies and procedures.

For more information please contact a member of the Asset Management & Investment Funds Team.

Date published: 25 March 2021