EBA Issues Draft to Set up Central Database for AML and CFT

  • Richard Marley
  • December 21, 2021
  • 2 minutes read
  • 1670

On December 20, 2021, the European Banking Authority (EBA) issued its draft Regulatory Technical Standards (RTS) to establish a central database for anti-money laundering and countering the financing of terrorism.

The European Reporting system for material CFT/AML weaknesses (EuReCA) is being considered a primary tool in the efforts to prevent and combat money laundering and terrorism financing in the European Union. 

The EBA is legally obliged to set up and monitor a central AML/CFT database. The EuReCa database will comprise data about material weaknesses in different financial institutions that make them susceptible to money laundering and terrorist financing. 

All relevant authorities within the EU will be required to report weaknesses in their AML systems, as well as the steps they take to improve them.

The EBA’s draft RTS enlists details about the conditions when weaknesses will be considered material, the type of information that will be required from relevant authorities, how it is to be reported, and how the EBA will process and evaluate the information in EuReCa. 

Moreover, there are also new rules that ensure the confidentiality, effectiveness, and protection of personal data in EuReCa. The EBA also issued technical specifications that highlight the data points and a list of competent authorities that will be required to indirectly submit information to EuReCa.

The EBA will utilize EuReCa to get information on ML/TF risks that affect financial institutions in the EU. It will also share the information from the central database with relevant authorities when it is needed. In this way, the EBA will support the authorities at the various stages of the supervisory process, especially the risk analysis phase.

EuReCa will be used as an early warning mechanism, where competent authorities will be enabled to act before ML/TF risks elevate. By doing so, EuReCa will ultimately help strengthen the AML/CFT systems of financial institutions in the EU.

Suggested read:  EBA revised its guidelines on ML/FT risk factors