On 6 December 2022, the European Banking Authority (EBA) published a Consultation Paper on new guidelines to tackle de- risking.
Access to at least basic financial products and services is a prerequisite for organisations and individuals to participate in modern economic and social life. It can also save the lives of vulnerable customers, such as refugees or homeless people. However, such access is not always ensured.
To address this, the EBA has published a consultation on two new sets of guidelines. The first is adding a new section to the EBA’s Money Laundering and Terrorist Financing (ML/TF) risk factor guidelines, which set out what financial institutions should do to identify and tackle ML/TF risk. This new section will help financial institutions understand how Not-For-Profit organisations (NPOs) are organised, how they can be different from other customers and what they can do to manage ML/TF risks associated with such customers effectively instead of denying them access to financial services.
The second set tackles the issues of effective management of ML/TF risks by financial institutions when providing access to financial services. These guidelines clarify the interaction between the access to financial services and institutions’ Anti-Money Laundering and Counter Terrorist Financing (AML/CTF) obligations, including in situations where customers, including the most vulnerable, have legitimate reasons to be unable to provide traditional forms of identity documentation. In addition, they set out the steps institutions should take when considering whether to refuse or terminate a business relationship with a customer based on ML/TF risk or AML/CFT compliance grounds.