Money Laundering: Due Diligence Risk Factors

Under Article 17 (‘simplified due diligence’) and Article 18(4) (‘enhanced due diligence’)  of the fourth Money Laundering Directive (2015/849), the European Supervisory Authorities (ESAs) are required to issue guidelines to both firms and competent authorities on the risk factors to be taken into consideration when applying the required due diligence.

The three ESAs (ESMA, EBA and EIOPA) have now published a joint consultation paper on simplified and enhanced customer due diligence guidelines.

These guidelines come in two parts;

  • Title II is generic and applies to all firms and addresses, for example, specific enhanced due diligence that firms must apply where a customer is a PEP.
  • Title III is firm specific and contains guidelines for money remitters, investment managers, wealth management etc.

The ESAs have also published a separate joint consultation paper as required under Article 48(10), although this one is aimed at the competent authorities on the characteristics of a risk-based approach to supervision and the steps to be taken when conducting supervision on a risk-sensitive basis.

Comments on both papers are invited by 22 January 2016.