The European Banking Authority (EBA) recently proposed four regulatory technical standards (RTS) to reshape the anti-money laundering and counter-terrorist financing (AML/CFT) regime in European Union (EU). With the consultation period closing on June 6, 2025, and final submission to the European Commission slated for October 31, 2025, these standards herald a significant drive toward enhanced due diligence and regulatory harmonization across the financial sector. For institutions operating within the EU, proactive adaptation of these rules will be paramount.
These standards will form part of the EBA response to the European Commission Call for Advice on AML/CFT measures under the Sixth Anti-Money Laundering Directive (2024/1640 or AMLD6). Adopted on May 30, 2024, the AMLD6, along with the Anti-Money Laundering Regulation (2024/1620 or AMLR) and the Anti-Money Laundering Authority (AMLA), forms part of a comprehensive European Union AML package aimed at strengthening the AML/CFT regime in European Union. The four draft standards focus on critical aspects of AML/CFT compliance:
Direct AMLA supervision: The first RTS outlines the criteria for determining which institutions will be subject to direct supervision by the new EU Authority for Anti-Money Laundering. The EBA proposes a two-step process: initially identifying institutions based on their cross-border activities, followed by a harmonized risk assessment methodology to evaluate money-laundering and terrorist financing (ML/TF) risks.
Harmonized risk assessment methodology: The second RTS introduces a harmonized methodology for assessing ML/TF risks associated with each institution. This approach ensures consistency in entity-level risk assessments across the EU member states, reducing regulatory burdens for cross-border institutions by aligning information requests from different supervisors.
Enhanced customer due diligence: The third RTS focuses on defining the scope and quality of information required during customer due diligence, offering a flexible framework aligned with the new AMLR. This includes guidelines on the types of documents and sources of information used for verification.
Pecuniary sanctions and administrative measures: The fourth RTS sets indicators and criteria for determining the level of pecuniary sanctions and administrative measures, including periodic penalty payments. The aim is to ensure uniform assessment of AML/CFT breaches across the EU, with enforcement actions that are proportionate, dissuasive, and effective.
These draft RTS signify a substantial stride towards a more robust and unified EU AML/CFT framework. The emphasis on rigorous customer due diligence necessitates advanced onboarding and continuous monitoring processes. Financial institutions should consider investing in technologies that facilitate efficient data collection, verification, and ongoing monitoring. Solutions leveraging APIs and modern data analytics will be indispensable. As the regulatory landscape evolves, proactive compliance strategies are paramount. Banks must leverage advanced technologies, including AI-powered risk assessment tools, to navigate these complexities and ensure compliance. This strategic approach will not only mitigate risks but also enhance operational efficiency, positioning institutions for success in the dynamic financial environment.
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