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EBA opines for EU Commission to set up a single rulebook in combating money laundering and terrorist financing

On 10 September 2020, the European Banking Authority (EBA) published its response to the European Commission’s call for advice on how to strengthen the European Union (EU) legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT). The European Commission issued this call for advice to the EBA to benefit from its technical expertise across all areas of financial services regulation, as well as EBA’s legal duty to lead, coordinate and monitor the EU financial sector’s fight against money laundering/terrorist financing (ML/TF).

In its advice, the EBA sets out how the EU’s legal framework should be amended to tackle vulnerabilities linked to divergent national approaches and gaps in the EU’s AML/CFT defences.

Specifically, the EBA recommends that the Commission:

  1. Harmonises aspects of the EU’s legal framework where evidence suggests that the divergence of national rules and practices have had a significant adverse impact on the prevention of the use of the EU’s financial system for ML/TF purposes.
  2. Strengthens aspects of the EU’s legal framework where current provisions are insufficiently robust and create vulnerabilities in the EU’s AML/CFT defences. This is the case particularly in relation to the powers AML/CFT supervisors have at their disposal to monitor and take the measures necessary to ensure financial institutions’ compliance with their AML/CFT obligations.
  3. Reviews the scope of the EU’s AML/CFT legislation to ensure that the list of obliged entities is sufficiently comprehensive and well‐defined, and in line with international AML/CFT standards.
  4. Clarifies provisions in sectoral financial services legislation to ensure that they are compatible with the EU’s AML/CFT objectives. This includes making sure that ML/TF risk is addressed consistently across all sectors and throughout the supervisory process.

With this opinion, EBA proposes that the Commission establish a single rulebook where a robust set of common rules supports the implementation of a proportionate and effective risk‐based EU AML/CFT regime.

EBA’s press release can be found here.

EBA’s opinion on European Commission’s call can be found here.