One of the European Union's (EU) most important organs, the European Commission (EC) has released the third edition of its Supranational Risk Assessment Reports (SNRAs) and it covers the issues with anti-money laundering (AML) and counter-terrorism financing (CTF) more in detail than ever before.
The EU's status as a major world power makes it understandable why the statements made by SNRA are important. The report's advice and warnings will surely be taken seriously, especially by the member states of the EU. Among these member states are some countries with the highest AML risks, and they will make use of the report to ensure even safer transactions.
This article will focus on the importance of SNRAs and the impact of its most recent edition. Also, you can check this article to learn more about the European Union's stance concerning money laundering (ML) and terrorism financing (TF) risks. Moreover, learning more about the European Financial and Economic Crime Center (EFECC) may help to understand the importance given by the Europeans to AML/CTF concerns.
The Supranational Risk Assessment Reports
The European Union's (EU) Supranational Risk Assessment Reports (SNRAs) are a series of documents produced by the European Commission (EC) in order to assess potential risks to the EU as a whole. These reports are an important tool for the EC in the development of policies and strategies designed to safeguard the interests of the EU and its member states.
SNRAs are produced on an annual basis and cover a wide range of topics, including economic, environmental, and security-related risks. The reports are based on extensive research and analysis carried out by the EC and its partners and are designed to provide a comprehensive overview of the risks facing the EU.
In addition to identifying potential risks, the reports also provide recommendations for addressing these risks and mitigating their impact. The EC uses the information contained in the Supranational Risk Assessment Reports to develop and implement policies and strategies designed to protect the interests of the EU and its member states. These reports are an essential tool in the ongoing efforts to ensure the continued stability and prosperity of the EU.
Listed AML/CTF Concerns
Among the topics that are listed as AML/CTF concerns in the report are:
- Cash-related products and services (cash couriers, cash-intensive business, high-value banknotes, payments in cash, and privately owned ATMs).
- The financial sector (deposit on accounts, retail and institutional investment sector, corporate banking, private banking, crowdfunding, currency exchange, e-money, transfers of funds, illegal transfers of funds, payment services, virtual currencies, and other virtual assets, business loans, consumer credit, low-value loans, mortgage credits and high-value asset-backed credits, insurance (life and non-life) and safe custody services).
- Non-financial products and services (legal arrangements, high-value goods, high-value assets, couriers in precious metals and stones, real estate, services provided by accountants, and legal services).
- Gambling sector.
- Non-profit organizations.
- Professional sports (professional football).
- Free zones.
- Investor citizenship schemes and investor residence schemes.
Among these, the spotlight goes to;
Gambling: The European Commission has identified the online gambling sector as a high-risk area for money laundering and terrorist financing, according to its 2022 Supranational Risk Assessment Report. The Commission said the sector is particularly vulnerable due to the "non-face-to-face element, huge and complex volumes of transactions and financial flows". The report also highlighted the potential use of e-money and virtual currencies as well as the emergence of unlicensed online gambling sites. The Commission recommended that EU member states implement enhanced due diligence and customer due diligence measures in the sector.
Solutions for ML/TF Issues
Since the first edition of SNRA was published, legislative measures have been taken to different levels with the new rules. With these rules, the EC aims to reduce any risks when it comes to money laundering and terrorist funding.
Moreover, the European Commission plans to publish a new report by 2024. This new report will follow the recent changes that are made and will be made to the current EU regulatory framework.
Additional Recommendations to the Member States
SNRA has included different recommendations for each category on the list of AML/CTF concerns. Because of that, reading the recommendations from the article part-by-part is recommended. The full article can be directed from here.
Online gambling: When it comes to AML risks, member nations that are the target of illegal online gambling operations are frequently affected. According to the FATF, anonymous e-money processing services and virtual currencies are a part of the issue. The FATF also noted a lack of appropriate feedback and reporting of questionable solutions in the gaming industry. It is suggested that European financial intelligence units try to enhance the caliber of their reports and make better use of the data they are provided. The FATF also suggests enhancing AML protections for gaming through specialized training.
Real estate: The FATF also released its first version of a new advisory on AML risks in the real estate industry. Better explanations of the hazards connected with money laundering for property professionals were requested by consultation participants. In order for the industry to operate with more assurance in international real estate transactions, they also requested that the FATF comply with their standards. The FATF found that there is a lack of knowledge on the dangers associated with AML and how to reduce them. The industry is particularly vulnerable to being taken advantage of by those with political influence, by using anonymous corporations, by buying opulent residences, and by using virtual assets.
Apart from the data that is presented by the SNRA, making use of these recommendations would improve the safety of many transactions. Sanction Scanner is ready to make sure these transactions are being carried out with utmost safety. Contact us or request a demo; and we will make sure that you are far from ML and TF risks.