Colleges On Anti-Money Laundering And Countering The Financing Of Terrorism Have Become More Effective But Further Progress Is Needed, The EBA Finds

The European Banking Authority (EBA) today published its fourth Report on the functioning of anti-money laundering and countering the financing of terrorism (AML/CFT) colleges. The Report finds that competent authorities continued to improve the functioning of AML/CFT colleges in 2023. Nevertheless, further progress is needed especially in two key areas, namely: adjusting the functioning of AML/CFT colleges to the money laundering and terrorist financing (ML/TF) risks to which the underlying firm is exposed, and discussing the need for a common approach or joint action.

This Report sets out findings and observations from EBA staff’s monitoring of AML/CFT colleges in 2023, which suggest that, overall, competent authorities continued to improve the effectiveness of AML/CFT colleges. The EBA, nevertheless, identified two key areas in which the progress made by competent authorities was seen as insufficient, namely:

• Implementing the risk-based approach to the organisation of colleges.

The EBA found that the functioning of colleges (especially the frequency of meetings and form in which the information is exchanged) was not sufficiently adapted to the risks to which the firms were exposed and to their specificities. This meant that competent authorities could not allocate their resources in a sufficiently strategic manner.

• Ensuring that discussions on the need for a common approach are meaningful and systematic.

One of the main purposes of AML/CFT colleges is to allow competent authorities to identify common ML/TF risks and AML/CFT issues, and to coordinate the actions they take to address those risks and issues. The EBA found that few colleges had meaningful discussions on these aspects. As a result, competent authorities were rarely able to identify whether there were risks and/or issues that should be addressed in a coordinated manner.

The Report includes targeted recommendations to help competent authorities improve in these two key areas.

In addition, through its thematic monitoring of colleges, the EBA identified a number of ML/TF risks to which firms of the banking, payment and e-money sectors with a technology-oriented business model could be particularly exposed. The Report encourages competent authorities to take these risks into consideration when supervising such firms.

Legal basis and background

• Directive (EU) 2018/843 (AMLD) introduced an explicit requirement for competent authorities to cooperate with each other but did not provide a framework of how this cooperation should happen in practice.
• The ESAs Guidelines (JC 2019 81) on cooperation and information exchange between competent authorities supervising credit and financial institutions published in December 2019 provide details on how competent authorities should give effect to the cooperation requirements set out in AMLD, by establishing a framework for AML/CFT colleges.
• AML/CFT colleges are permanent structures that serve to enhance cooperation between different supervisors involved in the supervision of cross-border institutions. As of 31/12/2023, competent authorities reported 264 established colleges, 34 of which were set up in 2023.