The Joint Report published on May 31 by the European Supervisory Authorities (ESAs) provides context and considerations for situations requiring the withdrawal of authorization for serious breaches of AML/CFT rules.
The report covers various topics such as the assessment process including evidence requirements and procedural arrangements, interpretation of a breach, and impacts of authorization withdrawal. The report also provides the measures available to address risks and breaches of AML/CTF rules.
The report acknowledges that not all breaches are considered serious and both the type of AML/CFT provision that is not complied with, and the features of the breach are important factors. As such, different approaches to assessing the seriousness of a breach are proposed for consideration and nine criteria can be used to assess, including :
Egregiousness of breach
Knowledge of and non-remediation of breach
Presence of structural failure with regards to AML/CFT systems and controls
Significant impact on the integrity, transparency and security of a financial system
Significant impact on the viability of the obliged entity or on the financial stability of a Member State or of the Union as a whole
Significant impact on the orderly functioning of financial markets
Significant financial criminal activity has been facilitated or is otherwise attributable to the breach