CySEC C432 – Opinion of the European Banking Authority on the risks of money laundering and terrorist financing

Circular 432 of CySEC informs the Regulated Entities (CIFs, ASPs, UCITS Management Companies, Internally Managed UCITS, AIFMs, Internally Managed AIFs, Internally Managed AIFLNPs and Companies with the sole purpose the management of AIFLNPs) of the following:

  1. The European Banking Authority (EBA) published its Opinion on the risks of money laundering and terrorist financing (ML/TF) affecting the European Union’s financial sector (the “Opinion”). The Opinion has been issued in accordance with Article 6(5) of (EU) Directive 2015/849, which requires the EBA to issue an Opinion on the risks of Money Laundering (ML) and Terrorist Financing (TF) affecting the EU’s financial sector every two years.
  1. The ML/TF risks identified by the EBA include those that are applicable to the entire financial system, for instance, the use of innovative financial services, while others affect specific sectors, such as de-risking.
  2. Some of the risks identified in this Opinion, such as those associated with virtual currencies and innovative financial services, had already been identified in the previous two Opinions on ML/TF risks and continue to be very relevant today. Others are included in the opinion for the first time, such as differences in the treatment by NCAs of financial institutions’ involvement in facilitating or handling tax-related crimes (‘cum-ex/cum-cum’).
  3. The COVID19 pandemic illustrates how new ML/TF risks can emerge unexpectedly and that can impact firms’ ability to ensure adequate AML/CFT compliance, and competent authorities’ ability to ensure the ongoing supervision of firms in the current context of restrictions on movement.
  4. As a complement to this Opinion, the EBA has developed an interactive tool, which gives European citizens, competent authorities and credit and financial institutions access in a user-friendly manner to all ML/TF risks covered in the Opinion.

The CySEC expects that Regulated Entities take duly account and consult the Opinion as provided in paragraph 17 of the CySEC’s Directive for the prevention and suppression of money laundering and terrorist financing.

The use of innovative financial services is one of the main points, as well as to the risk of ML/FT, such as the COVID-19 Pandemic.

You can find Circular 432 here.

Also, you can contact our team of experts for any questions related to this subject.


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