The European Banking Authority (EBA) recently published the observations from a monitoring period it carried out on anti-money laundering (AML) and countering the financing of terrorism (CFT) colleges. The report finds that while discussions at several colleges have improved, none of the action points set out by EBA for 2022 have been fully addressed.
AML and CFT colleges are described by EBA as “permanent structures that bring together different supervisory authorities responsible for the AML or CFT supervision of a cross-border financial institution, which operates in at least three member states”. The aim of these colleges is to ensure that supervisors are able to cooperate for more “targeted supervisory outcomes in the fight against financial crime”.
The plan of action
In its latest 2022-2024 monitoring period, EBA followed 16 colleges to assess their operations based on six action points that were set out as priorities in 2022:
• Finalise the structural elements of the college.
• Enhance discussions during meetings.
• Foster ongoing cooperation between members and observers.
• Apply a risk-based approach to meetings.
• Take steps to identify areas for a “common approach” or “joint actions”.
• Enhance supervisory convergence.
Reality check
The monitoring by EBA, however, found the following weaknesses:
• More than 50 AML/CFT colleges were still not in operation. Some colleges had members that had yet to sign the requisite cooperation agreements, limiting their ability to share information.
• The number of third country observers remained very low, which limited what supervisors knew about group-wide risks.
• Members of competent authorities were not able to explain how information from AML/CFT colleges aided their work. Common approached or coordinated actions were rarely discussed because members did not determine whether the issues identified had a common root cause.
• Several lead supervisors had not adjusted the frequency of meetings based on their money-laundering or terrorist financing risks. This meant that some high-risk colleges met less frequently than colleges set up for lower risk institutions.
Moving forward
As a result, EBA has deemed the action points for 2022 still relevant for the 2023-2024 period. It encourages lead supervisors to address these points without delay to “make the best use of the AML/CFT colleges framework”.
The authority has also suggested a number of good practices that competent authorities should consider implementing, such as ensuring that members collect and share the necessary data to have an informed discussion at each college meeting, especially on the need to adopt a common approach or take coordinated measures.