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EBA: Progress Made on Growth Opportunities for Supranational AML/CFT Supervision

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The European Banking Authority (EBA) has released a report revealing notable progress in Europe’s international supervisory cooperation against financial crime. The regulator has also highlighted growth areas and several best practices to continue improving Europe’s anti-money laundering and counter-terrorist financing (AML/CFT) colleges. Supervisory colleges operate on a cross-border basis in at least three EU Member States.

The Role of Colleges in Europe’s AML Supervision 

Colleges are important to cross-jurisdictional AML/CFT supervision. They enable supervising authorities in different countries to create a more complete picture of the risks facing firms under their oversight. The colleges facilitate cooperative supervision by:

  • Ensuring timely information exchanges between supervisors.
  • Enabling cooperation to improve anti-financial crime outcomes.

The colleges operate under the 2019 Joint Committee Guidelines on cooperation and information exchange for AML/CFT supervision purposes. Although 18 existed before its promulgation, the EBA’s recent report says that by 2021, the total number had skyrocketed to 229. This year, an additional 54 colleges were announced, not yet in full operation.

In its report, the EBA explains that as of 2022, it was in charge of monitoring and supporting229 colleges. 2022 was also the year it adapted its monitoring approach in light of the colleges’ increasing maturity. As of 2023, the EBA monitors the AML/CFT colleges in several key ways, including:

  • Collecting yearly data from the colleges on their performance.
  • Close observation of a select group of colleges for more detailed insights into their activities.
  • Conducting thematic reviews of the colleges with the goal of identifying underrepresented sectors.

Key Achievements and Improvement Areas

The EBA’s 2022 report on the colleges’ functioning is the third of its kind. Based on a six action point rubric, it notes the colleges have significantly improved in: 

  • The timely sharing of relevant information. 
  • The quality of information exchanged in discussions between members.

The report also highlights several areas for growth in the remaining four action points, including:

  • Failure to consistently communicate important information regarding their cross-border financial institutions (FIs) outside of regularly scheduled meetings.
  • Lack of a strategic approach to shared information for assessing the root cause of issues shared by multiple members.
  • Failure to create a tailored meeting schedule depending on the supervised cross-border firm’s level of risk.
  • Failure to create strategies for coordinated action between supervisors.

The weaknesses identified were descriptions of broad observed patterns. Some colleges demonstrated above-average progress in the growth areas listed.

The EBA also outlined several good practices AML/CFT colleges can follow to ensure continued growth. These include: 

  • Plan at least one in-person meeting per year for high-risk FIs to improve trust and communication.
  • Ensure college members and any attending supervised FI prepare their presentation points ahead of the meeting to ensure productive discussion.
  • Streamline the presentation of denser information to leave time for member discussions afterward.

Implications for Firms

It’s important for European international firms supervised by an AML/CFT college to understand their relationship to it, and how it impacts their risk management approach. Firms can consult the EBA’s fact sheet on AML/CFT colleges to better understand their function. 

Beyond this, firms should maintain close and constant communication with the college supervising them. This can help ensure relevant authorities are aware of emerging risks or compliance difficulties a firm may be facing. It also can allow a firm to remain more abreast of risks and issues the college may have become aware of. All of this contributes to a sounder AML/CFT risk management approach.

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Originally published 17 August 2023, updated 17 August 2023

Disclaimer: This is for general information only. The information presented does not constitute legal advice. ComplyAdvantage accepts no responsibility for any information contained herein and disclaims and excludes any liability in respect of the contents or for action taken based on this information.

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