The three European Supervisory Authorities (EBA, ESMA and EIOPA) have published Joint Guidelines on cooperation and information exchange between competent authorities supervising credit and financial institutions (the Guidelines). This is the first time that such colleges appear in the context of anti-money laundering and countering the financing of terrorism (AML/CFT). Consultation on the Guidelines was launched back in November 2018 against the backdrop of AML scandals in the EU banking sector and disquiet around the effectiveness of the EU's AML/CFT regime.
The Guidelines reflect the FATF's International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation (2012), which state that the cooperation of authorities responsible for overseeing AML/CFT compliance is an essential part of an effective AML/CFT regime. They form part of the ESAs' wider focus on fostering a common approach to AML/CFT within the EU and complement the EBA's new AML supervisory role.
The Guidelines are designed to clarify the "practical modalities" of supervisory cooperation and information sharing; at the heart of which lie the AML/CFT colleges. The colleges will serve as permanent structures for cooperation and communication between supervisors from different Member States and third countries that are responsible for the AML/CFT supervision of the same firms.
The Guidelines set out:
- the rules governing the establishment and operation of the colleges for firms operating on a cross-border basis;
- the rules around the exchange of information between competent authorities;
- the role of prudential supervisors, who will be invited to participate as observers in appropriate cases;
- the coordination of supervisory action where appropriate; and
- a system of bilateral exchanges between competent authorities where the conditions for setting up a college are not met.
Application of the Guidelines
The Guidelines are addressed to competent authorities, who must incorporate them into their supervisory practices (through changes to their legal framework and supervisory processes). They apply from 10 January 2020. Authorities have a transitional period of two years from this date in which to establish AML/CFT colleges for all firms, cross-border and EU establishments that meet the conditions set out in the Guidelines. They should first establish colleges for firms assessed as high-risk for ML/TF purposes in line with the Risk-Based Supervision Guidelines.
