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The European Banking Authority (EBA) is seeking feedback on four draft Regulatory Technical Standards (RTS) that are poised to play a critical role in the EU’s revamped anti-money laundering and counter-terrorism financing (AML/CTF) framework.
Running until June 6, 2025, the consultation aims to collect input from stakeholders on how institutions and supervisors will meet their obligations under the new AML/CTF package.
It marks a significant step towards a unified rulebook and the rollout of the new EU Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA).
The proposed RTS provide detailed guidance on several pivotal aspects of the new regime. A key component is the process through which AMLA will determine which institutions fall under its direct supervision.
This will involve a two-step approach that considers cross-border activities, while deploying a harmonised risk assessment methodology to ensure that there is consistent oversight across the EU’s member states.
The EBA also proposes a uniform method for national supervisors to evaluate an institution’s risks, assess the quality of its controls and determine residual risks.
This is intended to reduce the regulatory burden for cross-border institutions while maintaining robust AML/CTF standards, and will likely be welcomed by payments and e-money institutions taking advantage of the EU’s passporting regime.
Transition period
In a major development, the EBA has proposed a five-year transition period for implementing new customer due diligence (CDD) measures, recognising the practical challenges of immediately applying updated standards to all existing customers.
The new Anti-Money Laundering Regulation (AMLR) requires obligated entities to comply with these updated CDD standards by July 10, 2027.
However, the draft RTS recommends a risk-based approach to prioritising compliance efforts, suggesting that institutions focus first on business relationships with higher money laundering or terrorist financing (ML/TF) risks.
For other, lower-risk customers, a gradual rollout is advised, allowing firms to complete the CDD process within five years while balancing compliance with operational capacity and ensuring AML/CTF integrity.
E-money changes
The draft RTS also address electronic money instruments, introducing a nuanced approach that provides clarity on when these instruments may qualify for exemptions under Article 19(7) of the AMLR.
The EBA suggests that supervisors consider risk-reducing measures such as low transaction thresholds, nominal charges for issuance and limited use cases, particularly where instruments are intended for specific goods or services within a single EU member state.
The RTS also emphasise the need for enhanced verification requirements for online or non-face-to-face transactions, recommending anti-impersonation measures that are adequately robust, such as electronic signatures and IP tracking.
In addition, the EBA has proposed that electronic money instruments include geo-fencing features to restrict use outside the EU.
This could have a two-fold impact on e-money products in the EU.
For example, prepaid cards with low transaction limits or specific use cases, such as gift cards and travel money cards, may qualify for AML/CTF exemptions if they demonstrate strong risk controls.
However, higher-risk or cross-border products may, like online transactions, face stricter verification requirements, and geo-fencing features could also restrict EU-issued prepaid cards from being used outside the bloc.
E-money products such as vouchers, gift cards and closed-loop systems could benefit from exemptions if they meet the risk-reducing criteria set out in the AMLR.
Such products with nominal charges and limited use within a single EU member state might face less regulatory scrutiny, but issuers would still need to monitor transaction thresholds and, again, comply with geo-fencing rules.
The draft RTS also expand on Article 22(6) of the AMLR, which concerns customer verification using electronic identification, or eID, methods.
Although eIDAS-compliant electronic identities are preferred, the EBA introduces flexibility for scenarios where such tools are not available.
In cases where customers cannot provide an eIDAS-compliant identity, whether due to being outside the EU or because they belong to vulnerable groups, institutions may use alternative verification methods in line with EBA guidelines on remote onboarding.
This approach aims to avoid excluding certain customer groups from accessing financial services while maintaining strong AML/CTF safeguards.
The EBA will host a virtual public hearing on April 10, 2025, providing an opportunity for stakeholders to engage directly with the proposals.
Interested parties are able to submit feedback through the EBA’s consultation page until June 6, and the final RTS are due to be submitted to the European Commission by October 31, 2025.
