The Joint Committee of the three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) published today its final Guidelines on the characteristics of a risk-based approach to anti-money laundering and terrorist financing supervision and the steps to be taken when conducting supervision on a risk-sensitive basis. These guidelines form part of the Joint Committee’s work to establish consistent, effective and risk-based supervisory practices across the European Union and contribute to a more robust European anti-money laundering and countering the financing of terrorism (AML/CFT) regime. They are consistent with international AML/CFT standards.
The risk-based supervision Guidelines are addressed to National Competent Authorities responsible for supervising credit and financial institutions’ compliance with applicable AML/CFT obligations. They define the characteristics of a risk-based approach to AML/CFT supervision and set out what Competent Authorities should do to ensure that their allocation of supervisory resources is proportionate to the level of money laundering and terrorist financing (ML/TF) risk associated with credit and financial institutions in their sector.
Specifically, these Guidelines require Competent Authorities to identify and assess the ML/TF risk to which their sector is exposed, and adjust the focus, intensity and frequency of supervisory actions in line with the risk-based approach. As part of an effective risk-based approach to AML/CFT supervision, Competent Authorities should have suitably qualified staff to carry out risk-based AML/CFT supervision in an informed and consistent manner. Finally, the Guidelines make it clear that the size or systemic importance of a credit or financial institution may not, by itself, be indicative of the extent to which it is exposed to ML/TF risk and that small firms that are not systemically important can nevertheless pose a high ML/TF risk.