BDB: Comments on Article 5d (sanctions screening) of the proposal for a regulation on instant credit transfers

27 January 2023

This requirement addresses the particular challenges of sanctions screening that has to be carried out in a matter of seconds and the resulting false positive hits that would doubtless result. In principle, the European Commission’s proposed solution could help to mitigate these challenges.

◼ The banking industry and member states will nevertheless need to take a critical look at the proposal owing to interactions with other rules and regulations. This concerns, in particular, the high sensitivity of compliance with European sanctions and embargo regimes and the interplay with other external requirements as well as credit institutions’ own measures to prevent financial crime.
◼ In the opinion of the GBIC, the European Commission’s proposals aimed at reducing the number of false positive hits interfere too much with existing screening mechanisms. The ban on filtering transactions, a regularly significant component in screening for violations of Union restrictive measures, opens up a security loophole in sanctions screening.
◼ Simultaneously tightening the liability rules for credit institutions results in a security risk arising from the legislation being transferred exclusively to the credit institutions and is therefore neither appropriate nor proportional in this form.
◼ In addition, the proposal is at odds with proposals currently being tabled under proposed AML legislation which (though inappropriate there) provide for sanctions screening obligations to be included in AML (due diligence) obligations. European lawmakers must therefore ensure that contradictory rules are not enacted at the same time. Obligations to carry out sanctions screening should not be included in AML legislation....

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