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Cross-border banking scandals prompt EBA calls for more cooperation between supervisors in AML/CFT colleges

By Mark Ford on October 3, 2022

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The European Banking Authority (EBA) has published a new report that calls for more proactive engagement between supervisors in anti-money laundering and counter financing of terrorism financing (AML/CFT) colleges.

This is the authority’s second report on the functioning of AML/CFT supervisory colleges, which are made up of permanent members from EU member states and the EBA as well as observers, which include AML/CFT supervisors from third countries.

Outline findings

The report finds that most competent authorities supervising credit and financial institutions have devoted resources to ensure effective functioning of AML/CFT colleges.

But it adds that ongoing cooperation and proactive information exchanges between supervisors has not been fully achieved yet in all AML/CFT colleges, which, due to their immaturity, are not yet fully embedded in supervisory processes.

The EBA says it wants to see the colleges take a more risk-based approach, with more frequent meetings held for cross-border institutions exposed to higher risks of money laundering or terrorist financing.

AML/CFT scandals

Some of the recent AML/CFT scandals involving cross-border European banks highlighted the lack of cross-border cooperation between the supervisors responsible for supervising these banks according to the report.

As a result, it concludes that emerging money laundering terrorist financing risks were able to crystallise resulting in an increased risk exposure to the entire group. It was evident that in the absence of a formal framework, cooperation between supervisors was often limited or not always happening in practice.

Areas for improvement

The report highlights several areas for improvement and reminds supervisors of the importance to exchange information in colleges on an ongoing basis and without delay, particularly where material weaknesses in an institution’s AML/CFT framework have been identified.

Examples of best practice in the report include well-structured and organised college meetings by lead supervisors; pro-active participation and sharing of comprehensive information by some members, and an effective involvement of prudential supervisors in some colleges.

The EBA report on the functioning of anti-money laundering and counter-terrorist financing colleges in 2021 can be found here.