The European Banking Authority (EBA) has issued two sets of final guidelines to standardize sanctions practices for financial institutions across the EU. These rules aim to improve internal policies and procedures for enforcing EU and national sanctions. They provide a clear framework for compliance, requiring institutions under the EBA’s supervision to integrate sanctions measures into their overall operations and decision-making processes.
Key Aspects Highlighted in the Guidelines:
Risk-based screening: Institutions must include sanctions compliance as part of their overall risk management process. Screening systems must be chosen, set up, and tested based on risk assessments tailored to the institution's size, business operations, and complexity.
System effectiveness: Screening systems must be reviewed regularly, at least once a year or whenever issues arise. Institutions must document how their systems work and their limitations to show they meet the required standards. These systems must also have sufficient human and technological resources to function properly.
Guidelines for payment and crypto-asset service providers (PSPs and CASPs): The guidelines provide specific due diligence and monitoring standards for PSPs and CASPs. These include clear procedures to ensure that transactions do not help evade sanctions during fund and crypto-asset transfers.
Training and accountability: Institutions must offer ongoing training to ensure staff understand sanctions risks and their responsibilities. Senior management is ultimately responsible for ensuring strong oversight and effective management throughout the organization.
Improved regulatory coordination: The Guidelines aim to strengthen the enforcement of restrictive measures and protect the integrity of the financial system. By aligning practices across EU Member States, the EBA seeks to reduce inconsistencies and bolster the collective enforcement of sanctions. These Guidelines also align with upcoming regulations, such as the Regulation on Transfers of Funds and Crypto-Assets set to take effect on Dec. 30.
Key Aspects Highlighted in the Guidelines:
Risk-based screening: Institutions must include sanctions compliance as part of their overall risk management process. Screening systems must be chosen, set up, and tested based on risk assessments tailored to the institution's size, business operations, and complexity.
System effectiveness: Screening systems must be reviewed regularly, at least once a year or whenever issues arise. Institutions must document how their systems work and their limitations to show they meet the required standards. These systems must also have sufficient human and technological resources to function properly.
Guidelines for payment and crypto-asset service providers (PSPs and CASPs): The guidelines provide specific due diligence and monitoring standards for PSPs and CASPs. These include clear procedures to ensure that transactions do not help evade sanctions during fund and crypto-asset transfers.
Training and accountability: Institutions must offer ongoing training to ensure staff understand sanctions risks and their responsibilities. Senior management is ultimately responsible for ensuring strong oversight and effective management throughout the organization.
Improved regulatory coordination: The Guidelines aim to strengthen the enforcement of restrictive measures and protect the integrity of the financial system. By aligning practices across EU Member States, the EBA seeks to reduce inconsistencies and bolster the collective enforcement of sanctions. These Guidelines also align with upcoming regulations, such as the Regulation on Transfers of Funds and Crypto-Assets set to take effect on Dec. 30.
