European Banking Authority Opinion on Customer Due Diligence for Asylum Seekers

The European Banking Authority published an Opinion on the application of customer due diligence measures to customers who are asylum seekers from higher-risk third countries or territories. The Opinion, addressed to national EU regulators, outlines the EBA’s view on the application of customer due diligence measures by credit and financing institutions when entering into a business relationship with customers who are asylum seekers from higher-risk third countries. Firms are required under the EU's anti money laundering legislation (to be transposed into national law by June 27, 2017) to prevent financial systems being exploited for the purpose of money laundering or terrorist financing. The Opinion outlines how financial institutions can achieve a balance in providing asylum seekers from higher-risk third countries with access to financial services whilst complying with EU anti-money laundering and counter-terrorist financing requirements. Before entering into a business relationship, firms are required to apply customer due diligence measurers to know who their customers are. Asylum seekers are issued with official identity documents by an EU member state which confirms their status and right to reside in that EU member state. The EBA's view is that such identification should, subject to certain criteria being met, fulfil the specific CDD verification requirements. However, such documentation varies across member states and even within a member state. The EBA urges national regulators to work with the authorities to provide guidance to financial institutions. The Opinion also outlines the EBAs views on measures to mitigate money laundering and terrorist financing risks, such as (i) the removal of customer access to creditor overdraft facilities; and (ii) monthly turnover limits and limits on the amount a person can transfer to another person. The EBA concluded that regulators face complex challenges following the recent influx of asylum seekers. However, the legal framework in the European Union is adequately flexible to allow financial inclusion for asylum seekers whilst accommodating government demands for AML and CTF risk management. 

View the Opinion.