Shearman & Sterling LLP | FinReg | European Banking Authority Publishes Revised Guidelines on Risk Factors for Money Laundering and Terrorist Financing
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  • European Banking Authority Publishes Revised Guidelines on Risk Factors for Money Laundering and Terrorist Financing

    The European Banking Authority has published revised Guidelines on money laundering and terrorist financing risk factors for credit and financial institutions to consider when conducting business relationships and occasional transactions. The Guidelines will enter into force three months after their publication in all official EU languages and will replace the EBA's existing ML/TF Guidelines.

    The Guidelines have been introduced following changes made to the existing ML/TF regime under the EU's revised Money Laundering Directive, known as MLD5 (which has applied across the EU since January 10, 2020), and in light of new ML/TF risks identified by the European Supervisory Authorities. Key changes under the revised Guidelines relate to:
    • Business-wide and individual ML/TF risk assessments, with new explicit guidance that a holistic approach should be applied in both business-wide and individual risk assessments;
    • Identification of beneficial owners, meaning firms are no longer expected to assess the risk that customers may have sought to avoid face-to-face contact deliberately, although they are still expected to consider whether a reliable form of non-face-to-face ID was used and to take steps to prevent impersonation or identity fraud;
    • Compliance with enhanced customer due diligence requirements for high-risk third countries, including a new list of business relationships or transactions that firms should consider high risk as a minimum;
    • Sectoral guidelines on crowdfunding platforms, corporate finance, account information service providers and payment initiation service providers; and
    • Financial inclusion and de-risking, with guidance stating firms should apply risk sensitive measures to allow more individuals and businesses to gain access to financial services and that firms are not expected to stop offering services to some higher risk customers but should balance the need for financial inclusion with ML/TF risk.

    View the EBA's Guidelines.

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