ESAs provide guidance on anti-money laundering and counter-terrorist financing supervision

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.

The guidance can be found here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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