The European Banking Authority (EBA) has unveiled four regulatory technical standards (RTS) aimed at overhauling the anti-money laundering and counter-terrorist financing (AML/CFT) framework across the European Union (EU). The consultation on these proposals will conclude on June 6, 2025, with a final submission to the European Commission set for October 31, 2025. This initiative is part of an effort to improve due diligence and harmonization in the financial sector. Institutions within the EU are advised to adjust their operations in anticipation of these forthcoming regulations.
The proposed standards are a response to the European Commission Call for Advice concerning the Sixth Anti-Money Laundering Directive (“2024/1640 or AMLD6”). Adopted on May 30, 2024, AMLD6, along with the Anti-Money Laundering Regulation (“2024/1620 or AMLR”) and the Anti-Money Laundering Authority (“AMLA”), contributes to a comprehensive EU package designed to strengthen the AML/CFT regime. The draft standards address critical compliance aspects:
The first RTS establishes the criteria for direct supervision by the new EU Authority for Anti-Money Laundering. The EBA suggests a two-phase procedure beginning with identifying institutions engaged in cross-border activities, followed by a harmonized risk assessment to evaluate money-laundering and terrorist financing (ML/TF) risks.
A harmonized methodology for ML/TF risk assessment is introduced in the second RTS, aiming to ensure consistent risk evaluations across EU member states. This approach is intended to reduce regulatory burdens on cross-border institutions by standardizing information requests across various supervisors.
The third RTS elaborates on the scope and quality of information required for customer due diligence. It offers a flexible framework aligned with the new AMLR, providing guidelines on verification through documents and information sources.
The fourth RTS delineates the criteria for determining pecuniary sanctions and administrative measures, including periodic penalty payments. Its objective is to ensure consistent assessments of AML/CFT breaches throughout the EU, facilitating proportionate, dissuasive, and effective enforcement actions.
These draft standards represent a significant move towards a more coherent and stringent EU AML/CFT framework. The focus on rigorous customer due diligence calls for advanced onboarding and monitoring processes. Financial institutions are encouraged to invest in technologies supporting efficient data management, leveraging modern data analytics and APIs. As regulations evolve, proactive compliance strategies are crucial. Banks should utilize AI-driven risk assessment tools to manage these challenges effectively while enhancing operational efficiency and positioning for success in an evolving financial landscape.
