On 5 February 2020, the European Banking Authority (EBA) published a report on competent authorities’ approaches to anti-money laundering and countering the financing of terrorism (AML/CFT) supervision of banks.
The report summarises the findings from the first year of ongoing reviews of all competent authorities responsible for AML/CFT supervision of banks in the EU. In 2019, the EBA reviewed seven competent authorities from five Member States and made recommendations tailored to each competent authority to support their AML/CFT efforts.
The EBA observed that all competent authorities in its sample had undertaken significant work to apply the risk-based approach to AML/CFT including in a number of cases a significant expansion of supervisory teams. Overall, AML/CTF supervisory staff had a good, high level understanding of international and EU AML/CFT standards and demonstrated a commitment to tackling financial crime.
However, the EBA noted that most competent authorities experienced challenges in operationalising the risk-based approach to AML/CFT and that each competent authority faced challenges unique to their own circumstances.
Common challenges that were exhibited in all the sampled competent authorities included:
- translating theoretical knowledge of money laundering and terrorist financing risks into supervisory practice and risk-based supervisory strategies;
- shifting from a focus on testing compliance with a prescriptive set of AML/CFT requirements to assessing whether banks’ AML/CFT systems and controls are effective, and taking corrective measures if not; and
- cooperating effectively with domestic and international stakeholders to draw on synergies and to position AML/CFT in the wider national and international supervisory frameworks.
Based on these findings and as part of its new mandate to lead, coordinate and monitor AML/CFT supervision efforts across the EU, the EBA will continue its series of implementation reviews and provide support and training to all EU competent authorities throughout 2020.