On 5 February 2020, the European Supervisory Authorities (ESAs) jointly published a consultation paper seeking to revise the guidelines that set out factors that firms should consider when assessing the money laundering and terrorist financing (ML / TF) risk associated with their business, and with a business relationship or an occasional transaction with any natural or legal person. The guidelines also set out how firms should adjust the extent of their customer due diligence (CDD) measures in a way that is commensurate to the ML / TF risk they have identified.
The ESAs originally issued the guidelines in June 2017. Since then, the applicable legislative framework in the EU has changed. On 9 July 2018, the Fifth Anti-Money Laundering Directive (AMLD5) entered into force and became applicable from 10 January 2020. The AMLD5 amends the Fourth Anti-Money Laundering Directive (AMLD4) introducing a number of changes that warrant a review of the guidelines to ensure their ongoing accuracy and relevance, this is the case in particular in relation to the provisions on enhanced CDD related to high-risk third countries. Also, the ESAs’ 2019 joint opinion on the ML/TF risk affecting the EU’s financial sector highlighted ongoing concerns, by competent authorities across the EU, about firms’ identification and assessment of both, business-wide risk and the risk associated with individual business relationships, and the application of CDD measures.
In light of this the consultation paper contains guidelines that have been updated regarding:
- business-wide and individual ML / TF risk assessments;
- customer due diligence measures including on the beneficial owner;
- terrorist financing risk factors; and
- new guidance on emerging risks, such as the use of innovative solutions for CDD purposes.
Also, additional sectoral guidelines have been added on crowdfunding platforms, providers of currency exchange services, corporate finance, and payment initiation services providers and account information service providers.
The deadline for comments on the consultation paper is 5 May 2020. Once the revisions have been finalised, the ESAs will repeal the previous June 2017 guidelines.