New EBA Guidelines on ML/TF risk factors
August 2022The European Banking Authority (‘EBA’) published revised Guidelines (updated on 8th August 2022) on customer due diligence (‘CDD’) and the factors to be considered when assessing the risk of money laundering (‘ML’) and terrorist financing (‘TF’) under the 4th and 5th Money Laundering Directives (repealing and replacing the 2017 guidelines).
The Guidelines set out the factors to be taken into account by credit and financial institutions when assessing the ML /TF risks associated with their activities and business relationships or with an occasional transaction with a natural or legal person.
The Guidelines also feature guidance on:
- how financial institutions can adjust their CDD measures to mitigate the ML/TF risk they have identified so as to make them more appropriate and proportionate;
- the identification of beneficial owners;
- the use of innovative solutions to identify and verify customers’ identities;
- how financial institutions should comply with enhanced CDD (‘EDD’) requirements relating to high-risk third countries;
- new sectoral guidelines for crowdfunding platforms, corporate finance advisory firms, account information service providers, payment initiation services providers, and firms providing currency exchange services;
- more details on TF risk factors;
The guidance highlights that there is no requirement for financial institutions to discontinue services to entire categories of customers that they associate with higher ML/TF risk (so-called ‘de-risking’). Instead, financial institutions should take steps to effectively manage the ML/TF risks associated with individual business relationships.
To read the EBA Guidelines in their entirety, please see the following link:
Final Report on Guidelines on revised ML TF Risk Factors.pdf (europa.eu)