The Fourth Money Laundering Directive (4MLD) requires credit institutions and financial institutions to ensure that group-wide anti-money laundering / counter financing of terrorism policies and procedures are implemented effectively across all branches and majority-owned subsidiaries to the extent that local law permits this. Where it does not, credit institutions and financial institutions must take steps to effectively handle the resultant money laundering / terrorist financing risk. However, the 4MLD does not set out in detail what these institutions should do to manage the money laundering and terrorist financing risk in those situations. Instead, Article 45(6) of the 4MLD requires the European Supervisory Authorities (ESAs) to develop draft regulatory technical standards (RTS) that set out what these steps should be.

Following an earlier public consultation the Joint Committee of the ESAs has published a report containing draft RTS setting out the measures that credit institutions and financial institutions must take to mitigate the risk of money laundering and terrorist financing where a third country’s law does not permit the application of group-wide policies and procedures.

In terms of next steps, the draft RTS will be submitted to the European Commission for approval.

View Joint Committee of ESAs submits final draft RTS on strengthening group-wide management of money laundering and terrorist financing risk under MLD4 to European Commission, 6 December 2017