The committee’s consultation paper  http://www.eba.europa.eu/documents/10180/1240311/JC+2015+060+%28Joint+Consultation+on+Guidelines+on+AML_CFT+RBS_Art+48%2810%29%29.pdf on the risk-based supervision guidelines (JC 2015 060) focuses on the characteristics of a risk-based approach to anti-money laundering (AML) and counter financing of terrorism (CFT) supervision and the steps supervisors should take when conducting supervision on a risk-sensitive basis. The ESAs are required to issue the guidelines to competent authorities under Article 48(10) of MLD4. The aim is to create both a common understanding of risk-based supervision (RBS) and to establish consistent and effective supervisory practices across the EU, which comply with the Financial Action Task Force’s (FATF) standards. RBS is characterised as an ongoing and cyclical process that includes four steps: identification of the money laundering (ML) and terrorist financing (TF) risk factors, the risk assessment (whereby competent authorities use this information to obtain a holistic view of the ML/TF risk associated with each credit or financial institution), the allocation of AML/CFT supervisory resource based on the risk assessment, and monitoring to ensure the risk assessment and associated allocation of supervisory resource remains up to date and appropriate. The guidelines make recommendations for each of these steps and build on a preliminary report published by the ESAs in October 2013

The committee’s consultation paper http://www.eba.europa.eu/documents/10180/1240374/JC+2015+061+%28Joint+Draft+Guidelines+on+AML_CFT+RFWG+Art+17+and+18%29.pdf on the risk factors guidelines (JC 2015 061) covers simplified and enhanced customer due diligence and the factors credit and financial institutions should consider when assessing the AML/CFT risk associated with individual business relationships and occasional transactions. The ESAs are required to issue the guidelines under Article 17 and 18(4) of MLD4. The aim is to promote the development of a common understanding, by firms and competent authorities across the EU, of what the risk-based approach to AML/CFT entails and how it should be applied. Title II of the guidelines is generic and applies to all credit and financial institutions. It is designed to equip firms with the tools they need to make informed, risk-based decisions when identifying, assessing and managing AML/CFT risk associated with individual business relationships or occasional transactions. Title III of the guidelines is sector specific. It sets out risk factors that are of particular importance in certain sectors, including retail banks, wealth management and life insurance undertakings, and provides guidance on the risk-sensitive application of customer due diligence measures by firms in those sectors. The guidelines are likely to be finalised in spring 2016 and, once adopted, the ESAs will keep them under review and update them as appropriate.

Comments on both consultation papers should be received by 22 January 2016. The ESAs will hold a public hearing on the draft guidelines on 15 December 2015.