The European Association of Co-operative Banks (EACB) welcomes the opportunity to comment on the European Banking Authority’s (EBA) draft guidelines on money laundering and terrorist financing (ML/TF) risk factors and on their effective management when providing access to financial services. We complement the EBA on the careful consultation process in its effort to discourage de-risking of non-profit organisations (NPOs) and vulnerable customer groups.
Still, the EACB would like to draw the EBA’s attention to several concerns that it has identified with the proposed guidelines. Our observations cover the following:
- Annex that covers NPO customers: The requirements should be made more workable and proportionate, cutting compliance costs to avoid the guidelines exacerbating de-risking rather than remedying it. In part, this could be achieved by lowering requirements for first-time NPO customers who are nevertheless reputable.
- Subject matter, scope and definitions: The guidelines address only obliged entities as defined in Articles 3(1) and 3(2) of the AMLD4. These concepts are outdated, which could, by excluding presently widespread payment services, upset the playing field.
- General requirements: The guidelines contradict current practices in identifying and managing ML/TF risks and the management’s independent decision-making duty.
- Applying restrictions to services or products: The requirements in this section unduly burden the monitoring system by creating new categories of business relationships across various products and services.
- Complaint mechanisms: The requirements in this section, specifically that to hand over the respective report to each rejected customer, could impose an undue volume of legal actions upon banks, Member States' legal systems and pose undue liability risks to banks’ employees.
In this context, the EACB generally wishes to remark that the present guidelines contradict the development of anti-money laundering legislation (AML/CFT) in the European Union (EU), which has granted banks discretion in identifying risks and their management.