EBA ¦ AML/CFT Newsletter - Issue 13

EBA AML/CFT Newsletter Issue 13 – EBA Strengthens the Fight Against Financial Crime with New Guidelines and Supervisory Priorities

Addressing Emerging Risks in Virtual IBANs and Crypto-Assets

The European Banking Authority (EBA) has recently intensified its efforts to combat money laundering and terrorist financing (ML/TF) by releasing a series of reports, guidelines, and supervisory priorities that target emerging risks in the financial sector. One of the key focuses is on “virtual IBANs” (vIBANs), a technology widely used in payment processing. The EBA’s May report highlighted that the lack of a common definition leads to diverging regulatory approaches across national authorities, creating vulnerabilities related to payments, ML/TF, consumer protection, and authorization processes. This fragmentation risks undermining the integrity of the financial system unless harmonized regulatory measures are implemented.

Governance and Risk Management in Crypto-Assets under MiCAR

In June, the EBA published final guidelines on internal governance arrangements for issuers of asset-referenced tokens (ARTs) under the Markets in Crypto-assets Regulation (MiCAR). These guidelines emphasize that effective governance must include robust frameworks for identifying, managing, and mitigating ML/TF risks continuously. The EBA stresses that sound governance is foundational to maintaining the stability and integrity of crypto-asset markets, which are inherently vulnerable due to their novel nature and complexity.

Joint guidelines issued by the EBA and the European Securities and Markets Authority (ESMA) further clarify suitability assessments for management bodies and qualifying shareholders of ART issuers and crypto-asset service providers (CASPs). These assessments include evaluating the reputation and ML/TF risk profile of individuals involved, reinforcing the regulatory scrutiny necessary for market transparency and security. MiCAR provisions concerning public offerings and trading of ARTs and e-money tokens became applicable as of June 30, 2024.

Bastian Schwind-Wagner_Follow "The European Banking Authority is advancing financial crime prevention through enhanced regulations on virtual IBANs, crypto-assets governance under MiCAR, and by supporting AML/CFT supervisors with improved training and risk assessment tools. These efforts strengthen the EU’s capacity to detect and mitigate money laundering and terrorist financing risks across traditional and emerging financial sectors."

Enhancing Risk Assessment and Supervisory Training

To improve ML/TF risk detection, the EBA conducted a two-day workshop in May for over 350 EU AML/CFT supervisors, focusing on effective risk assessment methodologies at both entity and sector levels. This initiative supports the European Commission’s March 2024 Call for Advice on harmonizing ML/TF risk assessment frameworks across Europe. Additionally, a training event in July educated 430 supervisors on crypto-assets’ regulatory environments, ecosystem structures, ML/TF typologies, and compliance technologies. These educational efforts are crucial for equipping regulators with the knowledge required to supervise rapidly evolving financial technologies.

Implementing the ‘Travel Rule’ for Crypto-Asset Transfers

In July, the EBA introduced new guidelines aimed at enforcing the ‘travel rule’ to prevent ML/TF abuse in transfers involving funds and crypto-assets. The rules require payment service providers (PSPs) and crypto-asset intermediaries to accompany transfers with specified information and take appropriate actions when such data is missing or incomplete. This measure, effective from December 30, 2024, replaces previous joint guidelines and strengthens transparency in fund transfers, a critical tool for tracking illicit financial flows.

Supervisory Priorities for ART and EMT Issuers

The EBA’s supervisory agenda for 2024/2025 outlines four key priorities for issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs):

• internal governance,
• financial resilience including capital requirements,
• technology risk management, and
• managing financial crime risks.

The emphasis on financial crime risk management reflects the ongoing threat posed by ML/TF activities within crypto markets. Supervisors are tasked with ensuring that those who own or control these issuers do not expose them to unacceptable risks and that appropriate controls are in place.

Transitioning Towards a New AML/CFT Authority

Finally, the EBA welcomed the establishment of the new Anti-Money Laundering Authority (AMLA), which is set to take over the EBA’s AML/CFT responsibilities by the end of 2025. During this transition period, the EBA continues to support national authorities in preparing for AMLA’s operational start. This institutional shift aims to create a more unified and effective European response to financial crime.