The European Banking Authority has launched a central database for anti-money laundering and counter-terrorist financing (AML/CFT) that will be "central to coordinating efforts" to combat money laundering and terrorist financing in the EU.
The "Amber List," formally known as the European Reporting System for Material CFT/AML Weaknesses (EuReCA), will serve as a key "early warning tool" for the authority.
The reporting system will include information on "material weaknesses" identified by competent authorities in individual financial institutions across the European Union.
According to the EBA, these authorities will be required to report on measures imposed on financial institutions to "rectify those material weaknesses."
The "lack of adequate AML/CFT policies and procedures including the absence of transaction monitoring at the group level," as well as the "absence of policies and procedures for high-risk customers" who increase the financial institution's money laundering and terrorist financing risks, are examples of material weaknesses.
Internal audit findings identified by prudential authorities during on-site inspections will also be included in the database, as will information about the management bodies of financial institutions that "appeared to have been informed and decided not to remediate."
The EBA has stated that it will use EuReCA data to "inform its view of ML/TF risks affecting the EU financial sector," and that it will "share information from EuReCA with competent authorities as appropriate to support them at all stages of the supervisory process."
The EBA will specifically help financial institutions "should specific ML/TF risks or trends emerge," with the new platform serving as an "early warning tool" that will "help competent authorities to act before ML/TF risks crystallize."
The authority had set out its draft 'Regulatory Technical Standards (RTS) for the AML Amber List, according to AML Intelligence, which was published in December. Before a bank's name is added to the list, the draft RTS specifies exactly what type of information will be required.
"When weaknesses are material," the RTS says, "the type of information competent authorities will have to report, how the information will be collected and how the EBA will analyze and disseminate the information contained in EuReCa."
By fLEXI tEAM