Anti-money laundering

In July 2020, the European Commission put forward an Action Plan to further strengthen the EU's fight against money laundering (ML) and terrorist financing (TF). The Action Plan set out concrete measures that the Commission would take over the next 12 months to better enforce, supervise and coordinate the EU's rules on AML/CTF. It included actions to implement existing AML rules, to adopt new harmonised rules, to set up an EU level supervisor and a coordination mechanism for national Financial Intelligence Units.

AML rules cover, among others, financial institutions and insurance intermediaries when they “act with respect to life insurance and other investment-related services, with the exception of a tied insurance intermediary”.

BIPAR contributed to the consultation on the Commission Action Plan. BIPAR key messages were:

• the powers of the various national authorities with AML supervisory powers should be clarified;
• a possible AML Regulation could bring uncertainty and administrative burden for smaller operators;
• the activity-based and risk-based principle could be useful in identifying which economic operators need more attention of supervision and control.

Since 1 January 2020, following the European Supervisory Authorities' (ESAs) review, the European Banking Authority (EBA) has been solely responsible for leading, coordinating and monitoring Anti-Money Laundering/Counter Terrorism Financing (AML/CFT) efforts across the entire EU financial sector. The most recent work of EBA on AML that is relevant to our sector is the following:

• EBA revised Guidelines on money laundering and terrorist financing risk factors

The revision takes into account changes to the EU AML/CFT legal framework and addresses new ML/TF risks. The Guidelines are addressed to both financial institutions and supervisory authorities. They set out factors that firms should consider when assessing the ML/TF risk associated with a business relationship or occasional transaction. In addition, they provide guidance on how financial institutions can adjust their customer due diligence measures (simplified or enhanced) to mitigate the ML/TF risk they have identified so as to make them more appropriate and proportionate.

• EBA biennial Opinion on ML/TF risks affecting the European Union’s financial sector

EBA notes that Competent Authorities (CAs) considered the sector of life insurance intermediaries (LIIs) as presenting less significant exposure to ML/TF inherent risks.

• EBA Advice on the future of EU AML framework

In its advice to the Commission, EBA sets out how the EU’s legal framework should be amended to tackle vulnerabilities linked to divergent national approaches and gaps in the EU’s AML/CFT defences. EBA recommends, among others, to harmonise some AML rules such as customer due diligence measures through an EU Regulation directly applicable. It also recommends reviewing the scope of the AML framework, particularly regarding the (non-life) general insurers and general insurance intermediaries, investment firms and investment funds, mortgage credit intermediaries and consumer credit providers.The EBA Report states that ML/TF risk associated with the activities of general insurers and intermediaries is, in most cases, limited.

As a next step, the Commission is carrying out an impact assessment to inform its legislative proposals on AML, which are due to be published by July 2021.

- Published in June 2021 -