Skip to main content

The European Union watchdog – aka the EBA – backs the EU Commission’s AML Action Plan

Three months after the release of the European Commission’s AML Action Plan, the European Banking Authority (EBA) published its response on 19 August 2020.

In the document, which can be accessed in full here, the European watchdog gave its support to the Commission’s Action Plan and provided technical guidance for the implementation of the new strategy.

To ensure the effectiveness of the future EU AML/CFT framework, the EBA recommends that the Commission:

  1. Harmonise the EU’s legal framework to reduce the risk of gaps created by divergent approaches to transposing EU AML/CFT law into national law.
  2. Combine an ongoing role for national AML/CFT authorities with an EU-level AML/CFT supervisor in a hub and spoke approach that builds on national AML/CFT authorities’ local expertise and resources.

To ensure the efficiency of the future EU AML/CFT framework, the EBA recommends that the Commission, with regard to the EU-level AML/CFT supervisor:

  1. Leverage existing EU-level data, policy and administrative infrastructure to support the swift setting up of operations. The EBA is already working to ensure that any new AML/CFT resources or processes it puts in place can be adapted to be shared with the new supervisor to avoid duplication.
  2. Build on the EBA’s existing networks, coordination channels and cooperation mechanisms that bring together AML/CFT supervisors and prudential supervisors as well as payment supervisors and deposit guarantee schemes, at least initially, to ensure that current information flows and knowledge sharing at EU level and between competent authorities in the EU and with third countries are not interrupted unnecessarily.

Finally, the EBA calls on the Commission to take a pragmatic approach in regard to:

  1. The risk that bringing all obliged entities in scope from the outset will delay the operation of the EU-level AML/CFT supervisor, as setting up a new regime for sectors currently outside the scope of any central EU agency will take time. The EBA recommends that the Commission consider a gradual approach, starting with financial sector entities, and gradually expand the scope of the EU-level AML/CFT supervisor.
  2. The costs and benefits of setting up a new agency, compared to the costs and benefits associated with equipping an existing EU agency with adequate resources, powers and decision-making structures to take on additional tasks. This is particularly relevant in a context in which the EU economies have been heavily affected by the current COVID-19 pandemic.
EBA backs EU Commission’s AML Action Plan

Click the image above to view the full response.

Interestingly, the response directly mentions the translation of “at least some key AML/CFT requirements into directly applicable Union law” as a necessary prerequisite to support the effective functioning of a future EU-level AML/CFT supervisor.

The EBA is expected to officially respond to the Commission’s call for advice on defining the scope and application of new AML Regulation by 10 September 2020.

For a comprehensive overview of current AML regulations in the European Union and their impact on KYC compliance in financial services, download our white paper here.

For weekly updates on international money-laundering, KYC and financial regulations, make sure to follow Know Your Customer on Twitter and LinkedIn.

Last updated on April 23rd, 2023 at 07:36 pm

Claus Christensen

Claus Christensen is the CEO & Co-Founder of Know Your Customer. His vast array of previous experiences includes founding a technology company that develops email server infrastructure products for 60,000+ global customers and serving as VP Electronics at Thielert Aircraft Engines. A regular contributor to leading industry publications and a recognised expert in the anti-money laundering and financial regulation space, Claus is also the host of the RegTalks podcast and a senior lecturer of the Centre for Finance, Technology and Entrepreneurship (CFTE)’s RegTech Course.