These guidelines have been developed in response to the European Commission’s request in the context of its Digital Finance Strategy, published in 2020. They are also in line with the EBA’s legal mandate to lead, coordinate, and monitor the EU financial sector’s fight against money laundering and terrorism financing (ML/TF).
These guidelines set out the steps credit and financial institutions should take to ensure safe and effective remote customer onboarding practices in line with applicable anti-money laundering and countering the financing of terrorism (AML/CFT) legislation and the EU’s data protection framework. The guidelines apply to all credit and financial institutions that are within the scope of the Anti-money Laundering Directive (AMLD).
These guidelines establish common EU standards on the development and implementation of sound, risk-sensitive initial customer due diligence policies, and processes in the remote customer onboarding context. They set out the steps financial institutions should take when choosing remote customer onboarding tools and when assessing the adequacy and reliability of such tools, in order to comply effectively with their AML/CFT obligations. The guidelines are technologically neutral and do not prioritise the use of one tool over another.
Digital transformation is asking companies to respond to the growing demand for remote services from customers. This need was reinforced with restrictions during the COVID-19 pandemic. The draft contains a list of the details that internal policies and procedures should define:
Competent authorities must notify to the EBA whether they comply or intend to comply with the guidelines. In the absence of any notification by a deadline to be decided in the future, the competent authorities will be considered as non-compliant.
The AML/CFT compliance officer should prepare remote customer onboarding policies and procedures, ensure that these are implemented effectively, reviewed regularly and amended where necessary.
The financial operator management should approve policies and procedures, and oversee their correct implementation.
The guidelines include instruction about how financial sector operators should carry out a pre-implementation assessment. They also include instruction about how to carry out ongoing monitoring of the remote customer onboarding solution(s), how to put in place remedial measures in case of weaknesses, risks, or errors.
The Anti-money Laundering Directive (AMLD) sets out what financial institutions should do to comply with their AML/CFT obligations but it does not set out in detail what is, and what is not, allowed in a remote and digital context, when onboarding new customers. This has created risks where regulatory expectations of credit and financial institutions’ remote onboarding practices were unclear. It has also made the uptake of new or innovative forms of customer identification by credit and financial institutions more difficult. These risks and challenges were amplified by increasing demand for non-face-to-face customer take-on options during the COVID-19 pandemic.
When the EU issues an anti-money laundering directive, it also sets an implementation date by which appropriate AML/CFT legislation must be in place within member states. Since implementation periods can last several years, new money laundering and terrorism financing threats may emerge during that time. Accordingly, the EU issues new anti-money laundering directives regularly in order to reflect changes in criminal methodology and in AML/CFT best practices.
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