EBA recommends single rulebook for combating anti-money laundering in EU

The European Commission should establish a single rulebook, supporting the implementation of an effective and consistent risk-based anti-money laundering and counter terrorist financing (AML-CFT) regime for all member states, stated the European Banking Authority (EBA) in a 10 September opinion.

The EBA issued this opinion in response to the European Commission's request for advice in the matter of preventing money laundering and terrorist financing. The complete opinion consists of proposed adjustments to Directive 2015/849 on preventing the use of the financial system for money laundering and terrorist financing (AML Directive) and as a basis for future regulation.

In its 10 September opinion, the EBA made the following recommendations on combating anti-money laundering and counter terrorist financing (AML-CFT) in the EU:

• In order to set down directly applicable EU regulations, the European Commission should harmonise the measures taken for –
  • the control of customer due diligence;
  • identifying financial institutions subject to AML-CFT regulations;
  • general supervision rules.
• The current powers exercised by national AML-CFT supervisors should remain subject to EU directives with several adjustments made regarding the identification and reporting of suspicious activity and transactions.
• Uniform application is required when defining and listing those entities on an international level that are obliged to follow regulations preventing money laundering and terrorism financing. (Currently, the status of virtual asset service providers, investment firms and investment funds is unclear in many member states).
• The European Commission should consistently apply and supervise AML-CFT regulations across all sectors (with particular focus on data protection, deposit guarantee schemes and payment services).

On 3 March 2020, the EBA received a request for advice from the European Commission on defining the scope and conditions for the establishment of future regulations on AML-CFT. Specifically, the Commission asked the EBA to provide responses on the following:

• define the aspects of the AML Directive that need harmonisation and strengthening;
• identify gaps by listing the financial institutions and activities that should adhere to the rules on prevention of money-laundering and terrorist financing, but are not currently subject to EU regulations;
• assess the interaction between the AML Directive and a future regulation, and determine whether other EU legal instruments should be adjusted accordingly.

Recent developments in Bulgaria

August 2020 was the deadline for obliged entities under national legislation to adopt internal AML-CFT policies. These rules set out the approach of obliged entities to combat money laundering and terrorism financing, and to establish sound internal systems for achieving this goal. In addition, Bulgaria is expected to propose changes to the Bulgarian Measures Against Money Laundering Act that incorporate the provisions of the 6th AML Directive (EU Directive 2018/1673).

With national regulators increasingly concerned with preventing money laundering and terrorist financing, companies in a variety of sectors are making adherence to national and supranational AML-CFT regimes a key priority. For further information on AML compliance and its impact, call or email your regular CMS contact or our local CMS expert Ivan Gergov, CMS Sofia.