Guidelines on ML/TF risk factors

The European Banking Authority (hereinafter EBA) is an independent EU-authority established in Paris, formed on January 1, 2011 in order to maintain financial stability in the EU and to protect the integrity and orderly functioning of the banking sector. It does this by drawing up technical standards, guidelines and recommendations for the banking sector. At the beginning of March, the EBA published revised guidelines which were intended to reinforce the EU’s fight against money laundering and terrorism financing, to reconcile these with recent changes within the EU legal framework, and to address new risks. The EBA-guidelines focus on legislative bodies and supervisory authorities in the EU member states; the guidelines must be nationally implemented. The guidelines also include factors that financial enterprises must take into account when assessing a money laundering or terrorism risk connected to a business relationship or an incidental transaction. Furthermore, the guidelines provide information about the way in which financial institutions can adapt their customer research to restrict the risks of money laundering or terrorism financing established by them, with a view to rendering these measures more suitable and proportionate. For explanatory purposes, hereby a number of examples concerning the last two risk factors mentioned:

• a list of sources that enterprises can use in connection with risk estimates;
• the client or the ultimate beneficiary has links with sectors associated with a higher ML/TF-risk, such as specific money transaction offices, casinos or traders in precious metals;
• an unusual transaction report was made in the past with regard to the client or the ultimate beneficiary;

Banks are expected to observe the EBA-guidelines. Click here to read the full version.