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ESAs aim to standardise guidelines on money laundering prevention

Competent authorities and payment service providers across the EU should agree on how to prevent the abuse of funds transfers for terrorist financing and money laundering purposes, the Joint Committee of the three European Supervisory Authorities (ESAs) has said.25 Sep 2017

The ESAs consist of the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA).

Without consistent rules, authorities are likely to develop differing regulatory standards and disrupt the efficient functioning of payment systems, the ESAs said as they published guidelines aimed at fostering a consistent approach to anti-money laundering and countering the financing of terrorism (AML/CFT).

Transfers of funds can be used for terrorist financing and money laundering purposes. To prevent this, payment service providers must be able to establish who sends and receives these funds.

European legislation requires that specific information on payers and payees is passed along the payment chain, and that payment service providers have policies and procedures in place to ensure that this information is complete.

"However, there is a risk that competent authorities and payment service providers across the EU do not agree on what payment service providers should do to comply effectively with their legal obligations," the ESAs said.

The new guidelines cover the measures payment service providers should take to detect missing or incomplete information on the payer or the payee, and the procedures they should put in place to manage a transfer of funds lacking the required information.

This sets "clear, common regulatory expectations of payment service providers' policies and procedures and pave[s] the way for a more harmonised and effective, pan-European approach to AML/CFT in the funds transfer context," the ESAs said.

Justice commissioner Vera Jourová said in July that the majority of EU countries have failed to meet the deadline for implementing new laws designed to combat money laundering and the financing of terrorism.

Jourová has written to 17 EU countries over their failure to fully implement the EU's 4th Anti-Money Laundering Directive (MLD4). EU countries were required to transpose MLD4, which came into force in June 2015, into national law by 26 June this year.