The current issue of mass migration to the European Union is relevant also for providing financial services. On one hand, there are concerns over the reliability and robustness of some asylum seekers' identity documentation; on the other hand the access to financial products and services may enable their participation in economic and social life and may serve as a tool to the fight against money laundering and terrorist financing (ML/TF).
As many questions related to this topic arose, the European Banking Authority (EBA) published on 12 April 2016 its Opinion setting out measures credit and financial institutions can take to comply with EU Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) requirements when providing asylum seekers from higher-risk jurisdictions with access to basic financial products and services. The Opinion is addressed to competent authorities.
Institutions’ ML/TF obligations are set out in national law transposing the applicable EU legislation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. The so-called anti-money laundering and countering the financing of terrorism (AML/CFT) Directive (EU) 2015/849 has to be transposed by 26 June 2017. Until then, many Member States’ legislation will reflect similar provisions in Directive 2005/60/EC. In the Czech Republic the AML/CFT measures are contained in the Law on AML/CFT No 253/2008 Coll. as amended. The AML/CFT rules require institutions to apply customer due diligence measures before entering into a business relationship. This is the so-called “know your customer“ rule.
The EBA believes that “ML/TF risks can in most cases be managed effectively by offering a more limited range of services and/or setting up stricter monitoring controls, which will be conducive to early intervention in the event of suspicion”. Over time, institutions can adjust the extent of monitoring and the type of products and services offered as their understanding of the ML/TF risks will grow. Moreover, the EBA is convinced that specific guidance by national competent authorities on the risk management of these customers may be particularly useful. Hopefully, the proposed measures may also improve the credit risk management of the above mentioned clients.
19 May 2016