In this opinion the EBA notes that notes that de-risking poses ML/TF risks and continues to pose ML/TF risks. The EBA explains why this is the case: because customers affected by de-risking may resort to alternative payment channels in the EU and elsewhere to meet their financial needs. As a result, transactions may no longer be monitored, making the detection and reporting of suspicious transactions and, ultimately, the prevention of ML/TF more difficult.
The EBA also stated that the Risk Factors Guidelines are clear that the application of a risk-based approach does not require firms to refuse or terminate business relationships with entire categories of customers that are considered to present high ML/TF risk, as the risk associated with individual business relationships may vary, even within one category. The guidelines set out factors that firms should consider when assessing the ML/TF risk associated with a business relationship or occasional transaction and explain the need to carefully balance financial inclusion with the need to mitigate ML/TF risk.
Further the EBA explains that the application of risk-sensitive measures should enable more individuals and businesses to access and use regulated financial services. In the Opinion on the application of customer due diligence measures to customers who are asylum seekers from higher-risk third countries or territories, the EBA has, for example, set out measures that firms can take to comply with AML/CFT requirements in situations where a customer is unable to provide the standard CDD documentation, for example asylum seekers, in order to provide them with an access to basic financial products and services, including a basic bank account. In addition, the EBA is currently reviewing the Risk-based Supervision Guidelines, which will emphasize the importance for competent authorities of developing a good understanding of the ML/TF risk through their sectoral risk assessment and as part of this, developing their understanding of why certain sectors may be affected by de-risking.
In addition EBA stated that the EBA’s Risk-based Supervision Guidelines, currently being revised, will require competent authorities to communicate their risk assessment and regulatory expectations in terms of the management of that risk to the sectors to ensure that the risk is managed properly, instead of customers being de-risked.
Final Report on Guidelines ML/TF Factors
On 1 March 2021, EBA published its Final Report on the Guidelines on customer due diligence and the factors credit and financial institutions should consider when assessing the money laundering and terrorist financing risk. These guidelines have been updated regarding: business-wide and individual ML/TF risk assessments; customer due diligence measures including on the beneficial owner; terrorist financing risk factors; and new guidance on emerging risks, such as the use of innovative solutions for CDD purposes.
The guidelines will be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations. The guidelines will apply three months after publication in all EU official languages.
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