On 20 February 2017, the Joint Committee of the European Supervisory Authorities (ESAs) (that is, the EBA, EIOPA and ESMA) published an opinion (JC/2017/07), addressed to the European Commission, on the risks of money laundering and terrorist financing affecting the EU’s financial sector.

Read here 

The aim of the opinion is to inform the Commission’s risk assessment work, as well as the ESAs’ work on ensuring supervisory convergence and a level playing field in the area of anti-money laundering (AML) and countering the financing of terrorism (CFT). It is also intended to assist member states’ competent authorities in their application of the risk-based approach to AML/CFT supervision.

The opinion identifies problems in key areas including firms’ understanding of the money laundering and terrorist financing risk to which they are exposed and the effective implementation, by firms, of customer due diligence policies and procedures. It also notes the difficulties associated with the lack of timely access to intelligence that might help identify and prevent terrorist financing, and considerable differences in the way competent authorities discharge their functions.

The ESAs state that the risks highlighted in the opinion mean that more has to be done to ensure that the EU’s AML/CFT defences are effective. Among other things, the ESAs believe that:

• To ensure timely access to relevant information on money laundering threats, law enforcement agencies should identify ways to work more closely with firms to facilitate the identification of such risks.
• Competent authorities should collect AML/CFT supervisory data in a more consistent way to facilitate comparisons and track progress.
• The Commission, the EU legislators and the ESAs should give further thought to identifying ways in which the ESAs, and competent authorities, can ensure that the EU’s AML/CFT law and the ESAs’ AML/CFT guidelines are implemented effectively and consistently in all member states.

The opinion notes that several initiatives are already underway, which, in the short to medium term, will serve to address many of the risks identified. These include proposed amendments to the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4).

The opinion has been prepared under Article 6(5) of MLD4, which mandates the ESAs to issue a joint opinion on the risks of money laundering and terrorist financing affecting the EU’s financial sector every two years.