The European Supervisory Authorities (ESMA, EBA and EIOPA jointly) have launched a public consultation on two anti-money laundering and countering the financing of terrorism (AML/CFT) guidelines, to be made under the fourth Money Laundering Directive. The guidelines address how national authorities should apply the risk-based approach to AML/CFT and comprise:

  • Risk-Based Supervision Guidelines: these specify the characteristics of a risk-based approach to AML/CFT supervision and set out what authorities should do to ensure that their allocation of supervisory resources is commensurate to the level of money laundering and terrorist financing risk associated with credit and financial institutions in their sector;
  • Risk-Factors Guidelines: this consultation is addressed to both credit and financial institutions and competent authorities responsible for supervising compliance with the AML/CFT obligations. It provides guidance on simplified and enhanced due diligence, the factors credit and financial institutions should consider when assessing the risk of money laundering (ML) and terrorist financing (TF) associated with individual business relationships, and on how they should adjust their customer due diligence measures as a result of that risk assessment. Separate chapters address the position of retail banks, correspondent banks, e-money issuers, money transmitters, wealth managers, trade finance providers, life insurers, investment managers and investment fund providers. The ESAs stress that neither these guidelines, nor the Directive’s risk-based approach, require firms to refuse to enter into, or terminate, business relationships with entire categories of customers that are associated with higher ML/TF risk.

Consultation closes on 22 January 2016, and the ESAs hope to finalise the guidelines in early 2016. (Source:ESAs Consultation on AML/CFT Guidelines)