On 5 February 2020 the European Banking Authority (EBA) published its first Report on competent authorities’ approaches to the anti-money laundering and countering the financing of terrorism (AML/CFT) supervision of banks.

This report is one of the first actions to exemplify the EBA’s new and extended supervisory role within the Union. The new supervisory framework follows a series of high-profile scandals at European banks over the past few years which have cast a light on the weaker aspects of Europe’s current AML/CFT defences.

For this reason, “the European legislature gave the EBA new powers to lead, coordinate and monitor EU supervisors’ fight against ML/TF. It also gave the Authority a new objective, to prevent the use of the financial system for the purposes of money laundering and terrorist financing”. The law implementing the new powers and mandate came into effect on 1 January 2020.

The below infographic summarises the EBA’s new strategic objectives in the area of anti-money laundering and counter-terrorism.

Source: European Banking Authority

In the newly published report, the EBA’s findings show that “most competent authorities in this year’s sample are taking significant steps to strengthen their approach to AML/CFT supervision” and that “AML/CFT supervisory staff have a good understanding of international and European AML/CFT standards and are committed to the fight against financial crime”.

Nevertheless, according to the EBA, significant challenges remain, including:

  • the need to move away from a focus on tick-box compliance to assessing the effectiveness of banks’ AML/CFT systems and controls
  • the need to ensure stronger compliance by taking more proportionate and sufficiently dissuasive measures to correct deficiencies in banks’ AML/CFT systems and controls
  • a lack of effective cooperation with domestic and international stakeholders to draw on synergies and to position AML/CFT in the wider national and international supervisory framework.

To download the full EBA report on Competent Authorities’ approaches to the AML and CFT Supervision of banks, click here.

To download a fact sheet providing a full overview of the EBA’s new role in the fight against money laundering and financing of terrorism, click here.