EBA announces European AML database

Rick Steves

The EBA will leverage EuReCA to inform its view of ML/TF risks affecting the EU financial sector and share information with competent authorities should specific ML/TF risks or trends emerge, acting as an early warning tool. 

The European Banking Authority (EBA) has announced a central database for anti-money laundering and counter-terrorist financing (AML/CFT).

EuReCA – the European reporting system for material CFT/AML weaknesses – will contain information on material weaknesses in individual financial institutions in the EU that competent authorities have identified.

ML/TF risks affecting the EU financial sector

EBA states that EuReCa will be central to coordinating efforts by competent authorities and prevent and counter money laundering and terrorist financing (ML/TF) risks in the Union. Authorities will also report their requirements to rectify those material weaknesses.

Material weaknesses include the lack of adequate AML/CFT policies and procedures including the absence of transaction monitoring at the group level and the absence of policies and procedures for high-risk customers, which increase the ML/TF risk associated with the financial institution.

The reporting system also includes internal audit findings identified by a prudential authority during an on-site inspection about which the management body of the senior management appeared to have been informed and decided not to remediate.

The EBA will leverage EuReCA to inform its view of ML/TF risks affecting the EU financial sector and share information with competent authorities should specific ML/TF risks or trends emerge, acting as an early warning tool.

EuReCA will not start to collect personal data until the approval of the draft RTS by the European Commission.

ESG templates for large banks in Europe

Last week, EBA set out environmental, social and governance (ESG) templates for the top 150 banks to complete each year. Large banks in the European Union will have to publish “pioneering” indicators from 2024.

“We are pioneers here with templates and key performance indicators to ensure that when banks disclose something, they do it in a consistent way,” said Pilar Gutierrez, head of a disclosures unit at the EBA.

The move is pending final approval from the EU’s executive, but should allow investors to compare each bank’s exposure to (un)sustainable business models in terms of ESG.

Templates cover core banking books, but won’t include trading book assets like stocks and bonds as initially planned following industry concerns over their short-term nature.

If the European Commission does approve the ESG templates, banks will have to disclose their exposure to carbon-intensive activities and assets from 2023 onwards and provide details on their exposure on alignment with 2050 net zero goals.

 

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