Update: AML/CFT colleges guidelines

On 16 December 2019, three European supervising authorities (ESMA, EBA and EIOPA, hereafter the ESAs) have published several guidelines in relation to the cooperation and information exchange between supervisors responsible for supervising financial institutions (the Guidelines). In this newsletter we will discuss the background and highlights of these Guidelines.

Background

In 2012, the Financial Action Task Force (the FATF) adopted an international standard in relation to the prevention of money laundering and the financing of terrorism (the FATF Standard). Directive (EU) 2015/859, also known as the Fourth anti-money laundering Directive (the AMLD4), aims to bring the legislation within the EU in line with the FATF Standard. In 2018, AMLD4 was amended by Directive (EU) 2018/843 and EU Member States were obliged to enable the information exchange and cooperation between competent authorities for supervision purposes in relation to anti-money laundering and combating the financing of terrorism. With the Guidelines, the ESAs provide guidelines to the national regulators. The Guidelines provide for several clarifications and solutions in relation to practical issues and introduce one common framework enabling regulators to effectively establish cross-border working groups. These cross-border working groups are known as “AML/CFT colleges”. The AML/CFT Colleges will act as central point for the communication and cooperation between the various EU regulators and regulators from third countries involved in the (joint) supervision of the same financial institutions.

Highlights of the Guidelines

The Guidelines consist of 16 separate guidelines and several annexes in relation thereto. The most important topics of the Guidelines are:

• rules for the establishment of AML/CFT colleges; and
• rules for the exchange of information between competent supervising authorities.

Regarding the establishment of AML/CFT colleges, the following has – amongst others – been clarified:

• the mapping of financial institutions which should be supervised;
• the conditions for the cooperation between AML/CFT colleges and the relevant competent supervising authorities;
• the composition of AML/CFT colleges; and
• which procedural rules are applicable to AML/CFT colleges (e.g. in relation to meetings and mandatory agreements).

The Guidelines became effective as per 10 January 2020. It is important that AML/CFT colleges are established as soon as possible. However, when establishing AML/CFT colleges, the primary focus should be on financial institutions which are exposed to a high risk for money laundering and terrorist financing (e.g. due to the region or sector in which they operate). For all other eligible financial institutions, AML/CFT colleges should be established within two years as of 10 January 2020. Please do not hesitate to contact our Banking & Finance team if you have any further questions regarding the consequences of the Guidelines for you.