Circular C577 regarding: European Banking Authority (‘EBA’) public Consultation Paper on amendments to EBA’s Guidelines on money laundering and terrorist financing risk factors, to include crypto-asset service providers.
On 31st May 2023, the European Banking Authority (‘EBA’) launched a public consultation regarding amendments to the Guidelines on Money Laundering and Terrorist Financing (ML/TF) Risk Factors which aim to extend the scope of the Guidelines to include crypto-asset service providers (‘CASPs’).
The EBA proposal includes amendments to the ML/TF Risk Factor Guidelines to establish common regulatory expectations of the steps CASPs should take to identify and mitigate risks efficiently. The Guidelines introduce specific factors which may indicate the risk level pertaining to ML/ TF, which the CASP should consider both at the outset of the business relationship and on an on-going basis. The Guidelines also establish adjustments CASPS are expected to take with regards to customer due diligence (CDD).
Additionally, the Guidelines include measures that other credit and financial institutions are expected to take when engaging with CASPs or when otherwise exposed to crypto assets.
The Proposed amendments include the following CDD measures which firms are expected to take:
Engage with the customer in order to understand the nature of the business for ML/ TF purposes,
Identifying the beneficial owners as well as due diligence on senior management and taking into account any adverse information uncovered,
Understand the extent the customer applied their own CDD measures to their clients,
Establish whether the customer is registered or licensed in an EEA Member State or in a third country, considering the adequacy of the third country’s AML/ CFT regime,
Establishing whether the business using Initial Coin Offerings in the form of virtual currencies is legitimate and where applicable regulated,
The application of enhanced due diligence measures where appropriate.
Regulated Entities may respond to the public consultation by submitting their comments through the EBA’s consultation page, the deadline for which is 31st August 2023.
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By Andie Henderson, Legal & Compliance Associate, Financial Associates International (FAI Comply)