EBA Risk Assessment Report 2023

Financial crime risks

The „Risk Assessment Report December 2023“ by the European Banking Authority (EBA) addresses financial crime risks, particularly focusing on money laundering (ML) and terrorist financing (TF), in Chapter 6.3. Key points from this section include:

Reputation Damage and Legislative Response: A high number of ML cases involving European banks have damaged the sector’s reputation. In 2021, the European Commission (EC) proposed a legislative package to overhaul the EU’s legal framework for anti-money laundering and counter-terrorist financing (AML/CFT). This includes a single AML/CFT rulebook and the creation of the Anti Money Laundering Authority (AMLA) with direct supervisory powers.

Current ML/TF Risks and Supervision: Despite these efforts, ML/TF risks continue to be a concern. Banks often downplay ML/TF risks compared to other operational risks, though awareness is slightly increasing. Supervisors find ongoing issues with the effectiveness of AML/CFT systems and controls in banks. Additionally, many banks have been found to lack sufficient attention to compliance.

Risks from International Conflicts: The ongoing conflict between Russia and Ukraine has shifted banks‘ focus towards risks related to international sanctions, with a significant number of banks recognizing this as a high risk. There are also concerns about the complexity of ownership structures used to conceal assets and risks associated with crypto-assets.

Regulatory Developments and Reporting: Efforts are ongoing to address these risks, including new guidelines under Regulation (EU) 2023/1113 related to fund transfers and crypto-assets, and amended ML/TF Risk Factors Guidelines.

Reporting of Weaknesses: Since the launch of the European Banking Authority’s (EBA) EuReCA database in January 2022, significant numbers of AML/CFT deficiencies have been reported in credit institutions, with customer due diligence measures being the most common weakness.