EBA publishes regulatory instruments to address de-risking practices

Tuesday 23 March 2021 13:52 CET | News

The European Banking Authority (EBA) has published three regulatory instruments to address de-risking practices based on evidence gathered in its call for input.

The instruments clarify that compliance with anti-money and countering terrorist financing (AML/CTF) obligations in EU law does not require financial institutions to refuse, or terminate, business relationships with entire categories of customers that they consider presenting a higher ML/TF risk.

De-risking refers to decisions taken by financial institutions not to provide services to customers in certain risk categories. This can leave customers without access to the financial system. De-risking can be a legitimate risk management tool in some cases, but it can also be a sign of ineffective ML/TF risk management.

EBA launched a public consultation on changes to its existing Guidelines on risk-based AML/CFT supervision. The proposed Guidelines require authorities to take stock of the extent of de-risking in their jurisdiction and address de-risking in their ML/TF risk assessments. 

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Keywords: regulation, risk management, AML, financial institutions
Categories: Fraud & Financial Crime
Countries: Europe
This article is part of category

Fraud & Financial Crime

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