The EBA has issued its fourth biennial Opinion on the threats of money laundering and terrorist financing (ML/TF) affecting the EU’s financial sector.
The new Opinion focuses on the evolving risk landscape and suggests actions for competent authorities and EU co-legislators to mitigate those risks.
The changing risk landscape has significant implications for institutions’ anti-money laundering and countering the financing of terrorism (AML/CFT) compliance, and the authorities’ supervisory approach. Contributing factors to this shift include geopolitical events, such as Russia’s invasion of Ukraine, legislative developments like the comprehensive ‘AML Package’ and the Markets in Crypto-Assets Regulation (MiCAR), as well as emerging threats such as corruption, environmental crime and cybercrime.
ML/TF risks associated with crypto assets, innovative financial services, beneficial owner identification and terrorist financing are among those highlighted in the EBA’s Opinion. These issues, previously identified in earlier Opinions, continue to remain relevant. Risks brought into sharp focus in 2021, including those related to Covid-19 and de-risking, appear to be receding.
The EBA reports growing awareness of ML/TF risks across sectors, with modest but noticeable improvements in credit institutions and investment firms. However, the effectiveness of AML/CFT systems and controls remains questionable, with significant challenges related to transaction monitoring and reporting of suspicious transactions.
AML/CFT supervision is improving, with an increasing number of supervisors conducting formal ML/TF risk assessments following EBA Guidelines. The supervisory engagement frequency and intensity are also increasing, showing a minor but visible impact on inherent and residual risk levels. Cooperation among AML/CFT supervisors and other authorities is enhanced thanks to EBA initiatives.
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