The European Banking Authority (EBA) has published a new consultation outlining proposed Regulatory Technical Standards (RTS) to overhaul how anti-money laundering (AML) and counter-terrorism financing (CFT) are supervised across the EU. The proposed changes are intended to create consistency, clarity and stronger oversight across the bloc while informing the work of the new Anti-Money Laundering Authority (AMLA).
Napier AI, an AI-powered compliance platform tackling financial crime compliance, has delved into the EU regulatory Technical Standards for AML.
A major element in the proposed RTS is risk profiling, Napier AI explained. The EBA has set out a unified approach for AML supervisors to assess and classify the risk levels of obliged entities across all EU Member States. This framework will evaluate the inherent risk of a financial institution’s operations, categorising them from low to high risk based on customer profiles and business models. Supervisors will also review the effectiveness of AML controls within these entities and determine residual risk using a standard scoring system, with manual adjustments allowed where justified.
The proposals also introduce criteria for direct supervision under AMLA. Financial institutions that operate in at least six Member States could qualify for direct supervision if they exceed certain thresholds, such as having over 20,000 customers in a Member State or transactions above €50m, applying to both retail and institutional customers.
Customer due diligence (CDD) is another priority under the draft RTS. The EBA proposes standardised requirements for identifying and verifying customers and beneficial owners, with clear rules on data formatting, identity verification, cross-checking and record-keeping to ensure consistency across the EU.
Sanctions and penalties are also set for reform, Napier AI said. The proposed RTS seeks to clarify and align how financial penalties and administrative actions are applied by supervisors across the EU. It will guide supervisors in assessing the seriousness of breaches, including their duration and financial impact, and will introduce periodic penalty payments to encourage faster compliance, while ensuring actions remain proportionate to the nature of each case.
Napier AI said the EBA’s proposals are designed to be proportionate and practical, supporting financial institutions to implement these changes while managing compliance costs effectively.
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