Banks Progressing in the Fight Against Financial Crime

Banks Progressing in the Fight Against Financial Crime

In its latest report, the European Banking Authority (EBA) reveals the findings from its 2022 review of competent authorities’ efforts to combat money laundering and terrorist financing (ML/TF) risks in the banking sector. The report highlights the progress made by supervisors in their fight against financial crime and provides recommendations to further strengthen their approach. This article looks into the key findings and actions proposed by the EBA, shedding light on the ongoing battle to prevent the misuse of the European Union’s financial system.

Positive strides in the fight against financial crime

The EBA’s comprehensive assessment indicates that supervisors are making headway in combating money laundering and terrorist financing within the banking sector. Notably, several competent authorities have implemented substantial changes in recent years, resulting in a broadly effective approach to Anti-Money Laundering and Counter Terrorism Financing (AML/CFT) supervision of banks. This progress can be attributed to the EBA’s concerted efforts to promote a holistic approach to AML/CFT, encouraging closer collaboration, and facilitating information exchange among competent authorities.

The report highlights the significant strides made by many competent authorities in addressing ML/TF risks through prudential supervision. By embedding cooperation and information exchange into their supervisory processes, these authorities have achieved tangible progress in mitigating financial crime risks. However, it is worth noting that most supervisors evaluated in the 2022 sample were encouraged to intensify their efforts in tackling ML/TF risks within their respective banking sectors.

Challenges faced by competent authorities

Similar to previous rounds of reviews, the assessment found that competent authorities continue to face challenges when assessing ML/TF risks. The report indicates that several authorities did not effectively utilise their ML/TF risk assessments to inform their supervisory strategies and inspection plans. Furthermore, a lack of formalised processes and targeted training for AML/CFT and prudential supervisors hindered early intervention opportunities to address risks before they crystallised.

The EBA report provides actionable recommendations and guidance to competent authorities for strengthening their approach to tackling ML/TF risks in credit and financial institutions. The findings and proposed actions outlined in the report are relevant to all competent authorities operating in the single market, aiding their ongoing efforts to prevent the exploitation of the EU financial system for illicit purposes.

How 123signed helps mitigate financial crime risk

The EBA’s latest report on the efforts of competent authorities to combat money laundering and terrorist financing in the banking sector underscores the progress made in this critical area. The findings indicate that supervisors are taking effective measures to address financial crime risks, with notable improvements in AML/CFT supervision and prudential oversight. However, the report also emphasises the need for continuous improvement, highlighting challenges in risk assessment, supervisory strategy, and early intervention.

These findings reflect the experiences of financial firms, who have seen an increase in the scrutiny of their AML/CTF measures by Regulators.  For many, this is resulting in spiralling costs and onerous procedures requiring multiple providers as well as manual checks and processes.

Our 123signed technology takes a multi-layered approach to financial crime compliance, ensuring your regulatory AML and monitoring requirements are covered in a quick and easy process. Incorporating KYC and KYB processes, and an efficient transaction monitoring system, 123signed allows you to identify fraudulent activity during the onboarding process in real-time. As an automated tool which aggregates multiple solutions, 123signed provides everything you need in one cost effective application. Contact us today to find out more.

For the EBA’s report on competent authorities’ approaches to the AML CFT supervision of banks, click here