EBA statement on actions to mitigate financial crime risks in light of COVID-19

EBA statement on actions to mitigate financial crime risks in light of COVID-19

The European Banking Authority (EBA) has issued a statement designed to clarify its expectations in relation to measures to prevent money laundering and terrorist financing (ML/TF). The EBA reminds credit and financial institutions that it remains important to continue to put in place and maintain effective systems and controls to ensure that the EU’s financial system is not abused for ML/TF purposes, and asks competent authorities to support them in this regard.

The EBA calls on competent authorities that are responsible for the AML/CFT supervision of credit and financial institutions under Directive (EU) 2015/849 (the Fourth Money Laundering Directive (MLD4)) to support credit and financial institutions’ ongoing AML/CFT efforts by:

• making clear that financial crime remains unacceptable, even in times of crisis such as the COVID-19 outbreak

• continuing to share information on emerging ML/TF risks and setting clear expectations of the steps credit and financial institutions should take to mitigate those risks

• considering how to adapt the use of their supervisory tools temporarily to ensure ongoing compliance by credit and financial institutions with their AML/CFT obligations

Identifying new and emerging ML/TF risks

The EBA states that as most economies are facing a downturn, financial flows are likely to diminish. However, experience from past crises suggests that in many cases, illicit finance will continue to flow. The EBA therefore urges competent authorities to:

• work closely with credit and other financial institutions, financial intelligence units (FIUs) and law enforcement authorities to identify, and raise awareness of, new ML/TF typologies

• ensure that credit and other financial institutions remain alert to ML/TF techniques that might change due to the economic downturn and, where necessary, update their ML/TF risk assessments accordingly

• remind credit and other financial institutions to continue monitoring transactions and pay particular attention to any unusual or suspicious patterns in customers’ behaviour and financial flows. Credit and other financial institutions should in particular take risk-sensitive measures to establish the legitimate origin of unexpected financial flows, where these financial flows stem from customers in sectors that are known to have been impacted by the economic downturn and COVID-19 mitigation measures

• remind credit and other financial institutions to continue to report suspicions of ML/TF to the relevant FIU

Adjusting AML/CFT supervision

Mitigating the adverse effects of the current pandemic may require temporary adjustments in supervisory activity and, potentially, an adjustment of supervisory priorities and plans to ensure that AML/CFT supervision remains effective. The EBA therefore calls on competent authorities to support financial institutions’ ongoing efforts by sharing information on emerging ML/TF risks, setting clear regulatory expectations and using supervisory tools flexibly.

Sources: EBA statement on actions to mitigate financial crime risks in the COVID-19 pandemic

EBA press release: EBA provides additional clarity on measures to mitigate the impact of COVID-19 on the EU banking sector

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