Transcription of Opinion of the European anking Authority on ‘de-risking’
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Opinion of the European anking Authority on ‘de-risking’
EBA/Op/2022/01 5 January 2022 Opinion of the European Banking Authority on de-risking Introduction and legal basis 1. Financial institutions and credit institutions (hereinafter institutions ) have to put in place and maintain policies and procedures to comply with their legal obligations in accordance with Article 8 of Directive (EU) 2015/849 (AMLD)1. These policies and procedures include policies and procedures to identify and manage the risks to which they are exposed, for example credit risk or the risk that they may be used for money laundering and terrorist financing (ML/TF) purposes. Where a financial institution takes a decision to refuse to enter into, or to terminate, business relationships with individual customers or categories of customers associated with higher ML/TF risk, or to refuse to carry out higher ML/TF risk transactions, this is referred to as de-risking . 2. While decisions not to establish or to end a business relationship, or not to carry out a transaction, may be in line with Article 14(4) of Directive (EU) 2015/849 (AMLD), de-risking of entire categories of customers, without due consideration of individual customers risk profiles, can be unwarranted and a sign of ineffective ML/TF risk management.
OPINION OF THE EUROPEAN ANKING AUTHORITY ON ‘DE-RISKING’ 2 discussions on emerging findings and recommendations in the EA’s policy-making committees, as well as through bilateral exchanges with competent authorities and international standard setting bodies such as the secretariat of the Financial Action Task Force. The costs and benefits
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