Circular CSSF 21/782 is a CSSF circular, published 24 September 2021. Subject: Adoption of the revised guidelines, by EBA, on money laundering and terrorist financing risk factors.
\nRelevant for: AIFMs, AISPs, Central Securities Depositories (CSDs), Credit institutions, Credit servicers, Data Reporting Service Providers (DRSPs), E-money institutions, Investment firms, Investment fund managers, Investment funds and vehicles, Management companies - Chapter 15, Management companies - Chapter 16, Other specific authorisations, registrations and information, Part II UCIs, Payment institutions, Payment institutions/electronic money institutions/AISPs, Pension funds, Securitisation undertakings, SICARs, SIFs, Specialised PFS, UCITS, Virtual asset service providers (VASPs).
\nMain topic: Financial crime. Keywords: AML/CFT, Terrorist financing.
\nCircular CSSF 21/782 Adoption of the revised guidelines, by EBA, on money laundering and terrorist financing risk factors
\nCircular CSSF 21/782 Concern: Adoption of the revised guidelines, by EBA, on money laundering and terrorist financing risk factors
\nLuxembourg, 24 September 2021
\nDear Madam, dear Sir,
\nThe purpose of this circular is to draw your attention to the adoption by the European Banking Authority (“EBA”) of the Revised Guidelines on customer due diligence and the factors credit and financial institutions (“the professionals”) should consider when assessing the money laundering and terrorist financing (“ML/TF”) risk associated with individual business relationships and occasional transactions (“the Guidelines”) under Articles 17 and 18(4) of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC1. Since the publication of the original Joint Guidelines of the three European Supervisory Authorities (EBA, ESMA, EIOPA, i.e. “ESAs”) in 2017, Directive (EU) 2018/843 (5AMLD) amending Directive (EU) 2015/849, entered into force on 9 July 2018. The applicable legislative framework in the EU has thus changed and simultaneously, new ML/TF risks have emerged. For instance, the ESAs’ 2019 Joint Opinion on the ML/TF risks affecting the EU’s financial sector highlighted ongoing concerns by competent authorities across the EU, about professionals’ identification and assessment of both the businesswide risk and the risks associated with individual business relationships, and about the application of relevant CDD measures. Thus, so as to ensure the ongoing relevance and accuracy of the Guidelines, and to support the professionals’ AML/CFT compliance efforts, the Guidelines have been updated and completed accordingly. The revision of the Guidelines was also used as an opportunity to make further editorial amendments and to improve consistency throughout the document. The purpose of the Guidelines continues to provide guidance on the different ML/TF factors the professionals should consider when assessing their risks. Moreover, the Guidelines also specify how the professionals can adjust antimoney laundering and counter-terrorist financing (“AML/CTF”) customer due diligence measures commensurate with the level of risk associated with a business relationship or occasional transaction. Thus, they set out examples of due diligence measures, either simplified for lower risk or enhanced in order to mitigate higher identified risks.
\nThese revised Guidelines take account of the new and emerging risks related for example with the use of RegTech solutions for CDD purposes or terrorist financing, and contains more guidance on the identification of beneficial owners and enhanced customer due diligence related to high-risk third countries. Moreover, the Guidelines stress that professionals enhance in particular their understanding of (risks related to) tax crimes as there are substantial similarities between the techniques used to launder the proceeds of crimes and to commit tax crimes. Professionals should notably consider other relevant reports of EBA and/or ESMA, particularly the reports 1 and Action plan 2 on dividend arbitrage trading schemes (‘Cum-Ex/Cum-Cum schemes’). Finally, the Guidelines also specify that an effective risk-based approach should not result in systematically exiting or discontinuing to offer services to certain categories of customers associated with higher ML/TF risk (“de-risking” approach) and that professionals should also carefully balance the need for financial inclusion with the need to mitigate ML/TF risk.
\nThe text above is the opening of the document; the PDF carries the whole.
\nDocument page, PDF. Source: Commission de Surveillance du Secteur Financier (CSSF), reproduced with the CSSF's consent. The French text prevails.
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