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The European Banking Authority (EBA) has published new guidelines that aim to clarify the duties of anti-money laundering and counter-terrorism financing (AML/CTF) compliance officers.
The guidelines, which will come into force on December 1, apply to both compliance officers and management teams at credit and financial institutions.
In a press statement, the EBA said the guidelines are designed to ensure a common interpretation of AML/CTF internal governance requirements across the EU, in line with the provisions of Directive 2015/849 (also known as the 4th Anti-Money Laundering Directive).
As such, the guidelines set clear expectations for the role, tasks and responsibilities of AML/CTF compliance officers and management teams.
Credit and financial institutions should appoint one member of their management team who will ultimately be responsible for the implementation of the AML/CTF obligations.
If the credit or financial institution is part of a group, the guidelines prescribe that a group AML/CTF compliance officer must be appointed, and that this person’s tasks and responsibilities be made clear.
The management team is responsible for approving the credit or financial institution’s overall AML/CTF strategy and for overseeing its implementation.
This includes possessing adequate knowledge, skills and experience to be able to understand the money laundering and terrorist financing risks related to its activities and business model.
In its supervisory function, the management team is responsible for overseeing and monitoring the implementation of the AML/CTF internal governance and internal control framework.
In addition to the provisions set out in the European supervisory authorities (ESAs) guidelines on internal governance, management is to be informed of the results of business-wide money laundering and terrorist financing risk assessments.
They will oversee and monitor the extent to which the AML/CTF policies and procedures are adequate and effective, and take appropriate steps to ensure remedial measures are taken where necessary.
At least once a year, management should review the activity report of the AML/CTF compliance officer and obtain interim updates more frequently for activities that expose the credit or financial institution to higher money laundering and terrorist financing risks.
Similarly, at least once a year, the management will assess the effective functioning of the institution’s AML/CTF compliance, including by taking into account the conclusions of any AML/CTF-related internal or external audits that may have been carried out.
Such assessment will consider the adequacy of the human and technical resources allocated to the AML/CTF compliance officer.
Elsewhere in the guidelines, the EBA says that the management team should have access to account data and detailed information to enable it to discharge its AML/CTF functions effectively.
At a minimum, the management will have timely and direct access to the activity report of the AML/CTF compliance officer, the report of the internal audit function and, where applicable, the findings and observations of external auditors.
The management should also have direct access to the findings of the competent authority, including relevant communications with the Financial Intelligence Units (FIU) and supervisory measures or sanctions imposed.
The EBA notes that the new guidelines “complement but do not replace” other relevant guidance issued by the EBA on wider governance arrangements and suitability checks.
Legal basis and background
The EBA said it drafted the guidelines in line with its legal mandate to lead, coordinate and monitor the EU financial sector’s fight against money laundering and terrorist financing.
In drafting the guidelines, the EBA fulfilled a request from the European Commission in its Supra-National Risk Assessment (SNRA) of 2019 to develop guidance that “clarifies the role of AML/CFT compliance officers in credit and financial institutions”.
“Sound AML/CFT governance arrangements are key to fulfilling the private sector’s gatekeeper role and therefore to prevent and fight money laundering and terrorist financing,” the EBA said in a statement.
“Despite the specific requirements of Directive (EU) 2015/849 to establish and implement sound internal policies, controls and procedures institutions, past evidence revealed differences in interpretation and implementation of such provisions.
“This could have adverse consequences for the integrity of the EU’s financial system.”
