Major And Emerging ML/FT Risks Identified By The EBA In Its Report On Payment Institutions

The scale and nature of the money laundering and terrorism financing ("ML/TF") risk associated with the payment institutions ("PI") sector and the extent to which PIs' anti-money laundering and combatting of financing of terrorism ("AML/CFT") systems and controls are adequate and effective in tackling ML/TF risks are two of the primary areas of focus of a report issued by the European Banking Authority (the "EBA") on the 16 June 2023 (the "EBA Report").¹ The report follows an assessment of ML/FT risks in the PI sector carried out by the EBA in 2022.

The EBA Report builds on the opinion of the European Commission which, in its 2022 supranational risk assessment, commented that payment institutions are inherently exposed to both ML and TF risks and that they 'appeared to be most vulnerable to risks arising from weaknesses in AML/CFT systems and controls'.² The EBA Report emphasises that within the payment institutions sector there exist a variety of business