Compliance Platform Trustkantoren

Currently it is a common practice of Dutch banks to refuse certain groups of companies or organisations, claiming that these groups have a risk profile that is ‘too high’ for the risk appetite of the bank. The clients are not consulted by the bank on the alleged risk profile and in the Netherlands there is no discussion on the harmful practices of banks. Some companies and organisations meet a lot of difficulties to find a bank. This practice of refusing certain clients, that has nothing to do with criminal acts of these (future) clients, is called ‘de-risking’. The theme was already highlighted by MONEYVAL (read this post). I am following it for a time, read these posts.

Now the topic seems to have reached the desks of the European Banking Authority (EBA), the European supervisor of banks. On 15 June 2020 EBA issued a call for “input to understand the scale and drivers of ‘de-risking‘ at EU level and its impact on customers of financial institutions“, read this announcement:

EBA calls for input to understand impact of de-risking on financial institutions and customers
15 June 2020

The European Banking Authority (EBA) issued today a call for input to understand the scale and drivers of ‘de-risking‘ at EU level and its impact on customers. This call, which forms part of the EBA’s work to lead, coordinate and monitor the EU financial sector’s AML/CFT efforts, aims primarily to understand why financial institutions choose to de-risk instead of managing the risks associated with certain sectors or customers. This call for input is of interest to stakeholders across the financial sector and its users, as the EBA wants to hear from all groups affected by de-risking. The call for input runs until 11 September 2020.

To manage customers‘ profiles associated with higher money laundering and terrorist financing (ML/TF) risks, financial institutions may decide not to service a particular customer or category of customers. This is referred to as ‘de-risking‘, and affects both financial institutions and its users. De-risking affects particular sectors and customers across the EU, such as banks engaged in correspondent banking relationships, payment institutions and NGOs.

Given the variety of institutions and customers affected by de-risking and the different degree at which Member States are exposed to this phenomenon, the EBA is reaching out to stakeholders across the financial sector and its users to hear from their experiences.

Responses to this call will inform the EBA 2021 Opinion on ML/TF risks and potentially other policy outputs.

Process
The contributions to the call for input can be submitted by clicking on the “send your comments” button on the EBA’s dedicated webpage. All contributions received will be published, unless requested otherwise. The call for input is open until 6 p.m. CET on 11 September 2020.

Legal Basis
The EBA is mandated under Art. 6(5) of Directive (EU) 2015/849 to develop a biennial Opinion on the risks of money laundering and terrorist financing affecting the Union’s financial sector. The EBA also has a legal mandate to lead, coordinate and monitor the financial sector’s fight against ML/TF across the EU. [For more information, check the factsheet]

Links
 Call for input on ‘de-risking’ and its impact on access to financial services
 Anti-Money Laundering and Countering the Financing of Terrorism

Hopefully a discussion on the harmful de-risking practices of banks and other institutions is started.

This post was originally written for my general blog.

Posted on 16 juni 2020 at 12:40 in Vaktechniek   |  RSS feed |   Beantwoorden   |   Trackback URL