EBA Launches Public Consultation on Key AML/CFT Reforms

The European Banking Authority (EBA) has opened a public consultation on significant revisions to four of its core technical standards, marking a major step in shaping the European Union’s new anti-money laundering (AML) and countering the financing of terrorism (CFT) framework. The consultation will remain open until June 6, 2025, allowing stakeholders to provide feedback before the final standards are submitted to the European Commission on October 31, 2025.

These changes will play a crucial role in defining the AML/CFT obligations of financial institutions and supervisors across the EU. The European Commission has tasked the EBA with preparing the standards to ensure that the newly established EU Anti-Money Laundering Authority (AMLA) can function effectively. According to the EBA, the technical standards will be instrumental in harmonizing regulatory approaches and strengthening enforcement measures throughout the region.

Among the key proposals put forward by the EBA is a framework for the direct supervision of financial institutions by AMLA. The authority will determine which institutions fall under its direct oversight based on their cross-border activities and risk levels. “AMLA will first determine which institutions are eligible for direct supervision… then consider the outcomes of the harmonized money-laundering/terrorist financing (ML/TF) risk assessment methodology,” the EBA stated.

Additionally, the EBA is proposing a common methodology for assessing AML risks within financial institutions. This standardized framework will be used by national supervisors to evaluate risk levels, internal controls, and any vulnerabilities that may persist. “This approach,” the EBA noted, “will ensure consistent outcomes across Member States” while reducing compliance burdens for institutions operating in multiple jurisdictions.

Customer due diligence (CDD) requirements are also being revised, with the EBA advocating for a flexible approach to customer verification. Institutions will be required to comply with the new AML Regulation but will have discretion in choosing verification methods. “Institutions can choose the most appropriate approach within the framework of the AML Regulation,” the EBA explained. Instead of mandating specific documents, the EBA is proposing a list of acceptable documents and sources that financial institutions may use for verification.

Another key element of the proposals is a new standardized methodology for determining financial penalties and administrative sanctions. The EBA emphasized that enforcement actions must be “proportionate, dissuasive, and effective” across all EU Member States, ensuring a uniform approach to AML violations.

As part of the transition to the new framework, financial institutions will be required to collect CDD data from high-risk clients by July 10, 2027. For all other customers, a five-year transition period will apply, giving institutions time to adapt to the new requirements.

In preparation for the final submission of the standards, the EBA will also host a virtual public hearing on April 10, 2025, to discuss the proposals in detail with industry stakeholders. The authority has underscored the significance of these reforms, stating that they will fundamentally reshape AML efforts within the EU.

“The package will transform how the fight against money laundering and terrorist financing is organized in the EU,” the EBA stated. The changes will introduce a Single AML/CFT Rulebook, ensuring that national supervisory approaches are aligned and that AMLA has the necessary tools to effectively oversee financial institutions across the bloc. By fLEXI tEAM