EBA publishes AML/CFT Supervisory Reviews – what did the latest report reveal?

On December 13, 2024, the European Banking Authority (EBA) published results from its fourth round of reviews examining how supervisory authorities (NCAs) approach anti-money laundering and countering the financing of terrorism (AML/CFT) in the banking sector. The review evaluated AML/CFT supervisory authorities across all 30 member states of the European Union (EU) and European Economic Area (EEA).

This three-year review analyzed how individual NCAs implement risk-based approaches aligned with international standards, Directive (EU) 2015/849, and guidelines from the EBA and other European supervisory authorities. The report examines both the cooperation between AML/CFT supervisory authorities and their effectiveness in identifying and assessing ML/TF risks.

Legal Basis – what regulations govern EBA supervision of AML/CFT?

Articles 1, 8(1), 9a, and 29(1) and (2) of Regulation (EU) No 1093/2010 of the European Parliament and Council of November 24, 2010, establish the legal basis for these EBA reviews. 

These provisions authorize the EBA to ensure consistent supervisory practices, support uniform application of Union law, and protect the EU financial system from money laundering and terrorist financing. The EBA may conduct periodic reviews, investigate potential breaches, and issue specific recommendations to authorities.

What did the report reveal? Key findings and shortcomings

While obligated entities have made significant progress in implementing risk-based AML/CFT approaches, the EBA report identifies both good practices and areas needing improvement:

Shortcomings in Risk Assessment Methodologies at Entity and Sector Levels

The main discrepancies involved risk factor selection. Some authorities focused too narrowly on specific risk categories – such as certain customer types or products – while overlooking crucial factors like geographic risk and distribution channels.

Ineffective Use of Supervisory Powers and Tools

Most authorities lacked transparent systems for selecting and applying supervisory and administrative measures, including penalty calculations. The EBA emphasizes that AML/CFT supervision should match institutional risk levels – higher-risk entities require more frequent, detailed controls through various tools (on-site inspections, remote supervision, ad hoc checks).

Lack of Cooperation Between NCAs and National Authorities

Many authorities had not established effective cooperation mechanisms with third-country NCAs or arrangements for joint supervision. The EBA noted weak cooperation between national supervisory authorities, especially in financial and tax sectors. Authorities should regularly issue guidelines to harmonize AML/CFT standards nationally and internationally.

Discrepancies in ML/TF Risk Criteria

The EBA found inconsistencies in how NCAs identify and manage ML/TF risks. Institutions need to distinguish clearly between money laundering and terrorist financing risks, considering risk factors separately for each category.

Deficiencies in Training and Implementation Procedures for Staff

The report emphasizes that institutions need clear training and implementation strategies. They should establish transparent internal procedures for staff training and onboarding, with systematic training for both new and experienced employees.

What’s next? Recommendations and direction of change

Despite these shortcomings, the report provides valuable guidelines and notes significant progress in AML/CFT supervision. The reviewed authorities have shown a proactive approach to implementing post-review recommendations. These guidelines aim to strengthen and harmonize the AML/CFT system, ensuring consistent and effective supervision across the EU and EEA.

Do you have questions about the EBA guidelines? Consult with our experts and make sure your procedures meet European standards!