Corrigendum to the Guidelines on risk-based supervision

General Information

This corrigendum, published by the European Banking Authority (EBA) on 27 November 2023, complements the "Guidelines on the risk-based supervision" (EBA/GL/2021/16) relating to risk-based supervision in the fight against money laundering and terrorist financing (AML/CFT). It concerns cooperation, coordination and information exchange measures between competent authorities under Directive (EU) 2015/849, known as the 4th AML Directive, and applies to supervisory authorities of financial institutions in the European Union. The document is 3 pages long and aims to correct and clarify certain paragraphs and footnotes of the original guidelines.

Executive Summary

This corrigendum introduces targeted changes to the EBA guidelines on risk-based AML/CFT supervision to strengthen cooperation and information exchange between competent authorities. It highlights the importance of fully using the tools and measures provided by Directive (EU) 2015/849 to ensure reliability and continuity of exchanges, thereby avoiding information gaps (p. 2). Corrections include updating references to EBA joint guidelines and existing multilateral agreements between the ECB and national authorities, thus reinforcing the institutional cooperation framework. Furthermore, the corrigendum specifies that authorities must develop a thorough understanding of money laundering and terrorist financing (ML/TF) risks specific to each supervised sector to better prioritize their activities (p. 2). Formal adjustments are made to the numbering of points in certain paragraphs for greater clarity. Finally, footnotes are updated to reflect the most recent documents and guidelines, notably regarding compliance and cooperation between prudential supervisors, AML/CFT supervisors, and financial intelligence units (p. 2-3). These changes aim to improve coherence, clarity, and effectiveness of AML/CFT supervisory practices in the EU.

Context and Objectives

The original 2021 guidelines on risk-based AML/CFT supervision were issued to harmonize practices of competent authorities within the European Union, in accordance with Directive (EU) 2015/849. Since then, needs for clarification and updating have emerged, notably to strengthen interinstitutional cooperation and ensure consistent application of supervisory measures. This corrigendum addresses these needs by correcting formulations, updating normative references, and clarifying expectations towards competent authorities. The objective is to improve the reliability of information exchanges and understanding of sectoral risks to optimize AML/CFT control prioritization. The scope covers supervisory authorities of financial institutions in the EU, without extension to other sectors or third countries. The document does not modify the fundamental principles of the guidelines but adjusts their implementation.

Summary of Key Points by Theme

Cooperation and information exchange: The corrigendum stresses the exhaustive use of cooperation tools and measures provided by Directive (EU) 2015/849, notably the EBA joint guidelines on cooperation between AML/CFT and prudential supervisors, as well as the multilateral agreement between the ECB and national authorities. It underlines the need to ensure reliability and continuity of these exchanges to avoid information gaps (p. 2). Normative references and updates: Footnotes 23 and 24 are amended to incorporate the most recent documents, such as the consultation on AML/CFT compliance policies and forthcoming guidelines on cooperation between supervisors and financial intelligence units (p. 2-3). Understanding of sectoral risks: The corrigendum specifies that authorities must develop a good knowledge of ML/TF risks specific to each supervised sector. This understanding is essential to effectively prioritize supervisory activities, both intersectorally and intrasectorally (p. 2). Formal clarifications: The numbering of points in certain paragraphs is revised to improve readability and coherence of the text (p. 2). Practical cooperation: Paragraph 101 b) is modified to clarify cases where cooperation with other stakeholders is required and to describe the practical process of this cooperation (p. 3).

Main Findings and Lessons Learned

Findings: The corrigendum confirms that cooperation between competent authorities is a central pillar of effective AML/CFT supervision, supported by legal instruments and specific guidelines. It establishes that continuity and reliability of information exchanges are indispensable to avoid supervision gaps (p. 2). Assumptions: It is assumed that competent authorities already have the necessary tools and agreements to cooperate, but their application can be improved through clarifications and updates. Interpretations: The EBA interprets that a fine understanding of sectoral risks will allow better allocation of supervisory resources, thereby strengthening the fight against money laundering and terrorist financing. Uncertainties: The corrigendum does not explicitly address operational difficulties or potential obstacles to cooperation, nor the precise modalities for implementing the recommendations, leaving some ambiguity on practical application in varied contexts.

Conclusions and Recommendations

The EBA recommends that competent authorities strengthen the application of cooperation and information exchange measures provided by Directive (EU) 2015/849 and associated guidelines. It stresses the need to ensure reliability and continuity of these exchanges to avoid any information gaps. Authorities must deepen their knowledge of ML/TF risks specific to each supervised sector to better target their supervisory actions. The corrigendum also emphasizes clarifying practical cooperation processes with other stakeholders, which must be detailed in the authorities’ internal procedures. Finally, updating normative references aims to ensure that supervisory practices remain aligned with the most recent standards. These measures are priorities to improve the effectiveness of AML/CFT supervision in the European Union.