Providing access to at least basic financial products and services is a prerequisite for the participation in modern economic and social life and de-risking, when unwarranted, can cause the financial exclusion of legitimate customers.
The European Banking Authority (EBA) published today its
Opinion on the scale and impact of de-risking in the EU and the steps
competent authorities should take to tackle unwarranted de-risking.
Providing access to at least basic financial products and services is a
prerequisite for the participation in modern economic and social life
and de-risking, when unwarranted, can cause the financial exclusion of
legitimate customers. It can also affect competition and financial
stability.
De-risking refers to decisions taken by financial institutions not to
provide services to customers in certain risk categories. De-risking
can be a legitimate risk management tool but it can also be a sign of
ineffective money laundering (ML) and terrorist financing (TF) risk
management, with at times severe consequences.
To assess the scale and impact of de-risking across the EU and to
better understand why institutions decide to de-risk particular
categories of customers instead of managing the risks associated with
such relationships, the EBA reached out to all relevant competent
authorities across the EU, as well as to external stakeholders. The
EBA’s findings suggest that de-risking has a detrimental impact on the
achievement of EU’s objectives, in particular in relation to fighting
financial crime effectively and promoting financial inclusion,
competition and stability in the single market.
The EBA considers that its regulatory guidance on how to manage ML/TF
risks, if applied correctly, should help avert unwarranted de-risking.
To further complement this guidance, the EBA identified a number of
steps competent authorities and the European Commission and
co-legislators could take. In particular, the EBA encourages competent
authorities to engage more actively with institutions that de-risk and
with users of financial services that are particularly affected by
de-risking, to raise mutual awareness of their respective rights and
responsibilities. The EBA also advises the European Commission to
clarify, in the Payment Account Directive (PAD), the interaction between
AML/CFT requirements and the right to open and use a payment account
with basic features, and to take advantage of the forthcoming review of
the Payment Services Directive (PSD2) to ensure more convergence in the
way payment institutions access credit institutions’ payment accounts
services. The EBA is committed to following-up with competent
authorities on the actions they have taken to tackle unwarranted
de-risking going forward.
EBA
© EBA
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