EBA Consults on Draft Rules for Strengthening EU Anti-Money Laundering Framework

Key Takeaways

• Consultation on Draft Standards: The EBA is seeking input on four draft Regulatory Technical Standards (RTS) related to the EU’s anti-money laundering (AML) and counter-terrorism financing (CFT) framework.
• Risk Assessment Methodology: The EBA proposes a unified risk assessment methodology to ensure consistent evaluations across EU member states, especially for cross-border institutions.
• Customer Due Diligence Flexibility: A flexible approach to customer due diligence is recommended, allowing institutions to tailor compliance processes within the framework of the new AML regulation.
• Supervision Criteria: The consultation includes a proposal for a two-step approach to determine which institutions will be under the direct supervision of the new European Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA).
• Sanctions and Penalties: Guidelines for sanctions and penalties aim to ensure consistent and proportionate enforcement across the EU.

Deep Dive

The European Banking Authority (EBA) has thrown open the doors to a crucial consultation that could significantly shape the EU's anti-money laundering (AML) and counter-terrorism financing (CFT) landscape. Today, it launched a public consultation on four draft Regulatory Technical Standards (RTS), which are set to be key pieces in the European Union's evolving AML/CFT framework. These standards are not just regulatory technicalities—they will directly influence how financial institutions and supervisors tackle money laundering and terrorist financing across Europe.

The EBA is calling on stakeholders to share their views on these proposals, which, once finalized, will help guide the new European Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA) as it starts its work. The consultation period, running until June 6, 2025, gives industry players and experts alike an opportunity to shape these pivotal rules.

What’s on the Table?

This consultation is no small thing. It’s part of the broader effort to transform the EU’s approach to tackling financial crime. The EBA’s proposals focus on four key areas that will impact everyone from multinational banks to smaller institutions operating across borders. Let’s break down the main points:

1. Who Gets Supervised Directly by AMLA: The first RTS is all about who will come under AMLA’s direct supervision. AMLA is the new authority being set up to oversee high-risk institutions, but how do you decide which ones those are? The EBA suggests a two-step process: first, AMLA will focus on institutions with significant cross-border operations. Then, they’ll apply a standardized risk assessment methodology to make sure that the supervision is based on the level of money laundering or terrorist financing risk an institution poses.
2. Risk Assessment: Harmonized and Effective: Next up, the EBA is proposing a unified methodology for assessing the risk profile of each institution. This is where things get technical, but the goal is simple: to make sure that supervisors across Europe are using the same criteria when evaluating risks. The idea is to create a consistent approach so that institutions, especially those with cross-border operations, don’t face a patchwork of regulations. And it’s not just about identifying risks—it’s about evaluating how well institutions are managing those risks and what gaps remain.
3. Customer Due Diligence: Flexibility Meets Compliance: When it comes to customer due diligence (CDD), one size doesn’t fit all. The EBA proposes a flexible framework that allows institutions to tailor their CDD processes based on the risks involved. While the framework outlines which documents and sources institutions should consider, it leaves room for discretion on how they gather the information. This should help institutions avoid unnecessary compliance costs while still ensuring robust safeguards against illicit activity.
4. Sanctions and Penalties: Fair, Proportionate, and Effective: Finally, the EBA’s proposals include guidelines on how sanctions and penalties should be imposed for AML/CFT violations. The goal is to ensure consistency across the EU—no more wildly different fines or penalties from one country to the next. The EBA is aiming for a system that’s fair, proportionate, and effective in deterring non-compliance, while also introducing a methodology for imposing periodic penalty payments to ensure sustained compliance.

The EBA's work isn't just about ticking boxes for compliance—it’s about transforming the EU’s fight against financial crime. With the introduction of the new AMLA and a standardized set of rules, the EU is aiming for a more coordinated, streamlined approach to tackling money laundering and terrorism financing. For the first time, the EU will have a Single AML/CFT Rulebook, something that will make life easier for financial institutions operating across borders while keeping criminals on their toes.

But as with all major regulatory shifts, the devil is in the details. That’s why the EBA is asking for input. This is a chance for the industry to weigh in, suggest tweaks, and make sure that the final rules are effective, feasible, and fair. It’s a crucial moment, not just for compliance officers, but for anyone concerned with the integrity of Europe’s financial system.

How to Get Involved

Interested in having your say? The EBA is inviting feedback through its consultation page until June 6, 2025. Whether you're a bank, a regulator, or an expert in financial crime prevention, your input could shape the final standards. The EBA will also host a virtual public hearing on April 10, 2025, for those who want to dive deeper into the proposals and discuss them directly with EBA officials.

This consultation process isn’t just a formality—it’s a chance for everyone in the AML/CFT space to contribute to a rulebook that could define the next era of European financial crime prevention.

What’s Next?

Once the consultation wraps up, the EBA will consider all the feedback it receives and use it to refine the proposals. The final draft will be submitted to the European Commission by October 31, 2025, marking the next step in the EU’s ambitious overhaul of its AML/CFT regime.

It’s a lot to digest, but it’s clear that the EBA is laying the groundwork for something that could be transformative. For financial institutions, regulators, and anyone involved in the fight against financial crime, this is the moment to get involved.

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