Response to consultation on draft Guidelines on the role, tasks and responsibilities AML/CFT compliance officers
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Indeed, and for educational purposes and clarity of EBA’s doctrine, AMAFI suggests adding (i) a definition of “AML/CFT compliance officer” and (ii) definitions of abbreviations used throughout the draft Guidelines (e.g. “FIU” and “STORs” abbreviations).
Concerning AMAFI’s suggestion of adding a definition of “AML/CFT Compliance Officer” concept, since it is central in these draft AMLCO Guidelines and its role and responsibilities are subject to a proper Guideline (see Guideline 4.2) which is actually the longest one in terms of description and words. Furthermore, even if there is not a proper harmonised definition of this “AML/CFT Compliance Officer” concept in EU law, the EBA could rely upon article 8 (4) (a) of the 4th AML Directive, its draft Guideline 4.2, and article 9 (3) of the European Commission’s proposal for a Regulation on AML/CFT (which in a way takes into account the operational dimension of the AMLCO definition), and the financial sector experience to propose a generic definition of it. In that sense and moreover, AMAFI wishes to suggest to the EBA to use some concrete examples of the AMLCO’s day-to-day operations / missions (precising it is a non-exhaustive list): legal watch, monitoring compliance, preparing and updating policies and procedures, reporting to the management body, reporting of suspicious transactions to the FIU, training and awareness, reporting to the national competent authority (as it is actually and partially exposed in the proposed Guideline 4.2.4.).
Then, AMAFI wishes to point out there is no definition of the “Collective Investment Sector” concept mentioned in paragraph 34 of the draft Guideline 4.2.2 (Proportionality criteria for the appointment of a separate AML/CFT compliance officer). For the same reasons stated above, AMAFI also suggests adding a definition of this concept in the Definitions provided in Section 2. AMAFI believes the definition of this concept should be based and accompanied on / of practical examples.
Therefore, AMAFI would like to propose the following changes in the Definitions provided in Section 2 of the draft AMLCO Guidelines:
Proposed amendments
Definitions and abbreviations
9. Unless otherwise specified, terms and defined in Directive (EU) 2015/849 have the same meaning in the guidelines. In addition, for the purposes of these guidelines, the following definitions apply:
Definitions
AML/CFT Compliance Officer …………………….[EU definition of “AMLCO” concept]
Collective Investment Sector ……………………..[EU definition of “Collective Investment Sector”]
Management Body […]
Abbreviations
FIU Financial Intelligence Unit
STRs Suspicious Transaction Reports
AMAFI would therefore like to propose the following amendments in paragraph 16 (c) of Guideline 4.1:
Proposed amendments
16. To relation to internal policies, controls and procedures referred to in Articles 8(3) and 8(4) of Directive (EU) 2015/849, a financial sector operator’s management body in its management function should have the following AML/CFT tasks and responsibilities:
[…]
c) approving the AML/CFT compliance officer’s activity report mentioned in paragraph 52 of the present Guidelines (*), and ensuring its completeness, seriousness and accuracy;
(*) It should be specified that the AML/CFT compliance officer’s activity report may be in some Member States composed of different regulatory reports due to the national competent authority.
[…]
Firstly, as stated above (see AMAFI’s answer to Question 1), AMAFI suggests a definition of the “Collective Investment Sector” concept mentioned in paragraph 34 to be added in the Definitions provided in Section 2 of the draft AMLCO Guidelines accompanied with examples in order to clarify it.
Secondly, concerning the proposed Guideline 4.2.4 (“Tasks and role of the AML/CFT compliance officer”) and its subsection “c) Customers, including high risk customers”, AMAFI wishes to draw the attention of the EBA on paragraph 44. This paragraph states that “The AML/CFT compliance officer should exercise an advisory role before a final decision is taken by senior management on onboarding new high risk customers or re-classifying existing customers into the high risk category, unless the power to approve the establishment of such relationships is entrusted directly to the AML/CFT compliance officer”. However, in some investment firms subjected to EU AML/CFT regulatory framework, these decisions do not rely on and/or do not come within the responsibility of the AML/CFT compliance officer. Indeed, according to the internal organisation of some investment firms established in France, these decisions come within the responsibility of the business line involving line managers and, as the case may be (or where required), a senior manager or a member of the management body (for example: when the client is a political exposed person). The AML/CFT compliance officer’s opinion can be sought on specific cases bearing ML/TF risk(s). However, account must also be taken of the fact that in other investment firms, some French subsidiaries are not asked to provide an opinion on re-classifying existing customers into different risk categories, except for reviewing the client’s KYC. That is why AMAFI suggests precising this possible internal organisation setting in the proposed paragraph 44.
Finally, and as already mentioned above (see AMAFI’s answer to Question 2), AMAFI proposes to precise the AML/CFT compliance officer’s activity report mentioned in paragraphs 52 and 16 (c) does not supplement the already existing AML/CFT regulatory reports due to a national competent authority.
Therefore, AMAFI would like to propose the following amendments in paragraphs 44 and 52 of Guideline 4.2:
Proposed amendments
44. The AML/CFT compliance officer should exercise an advisory role before a final decision is taken by senior management on onboarding new high risk customers or re-classifying existing customers into the high risk category, unless the power to approve the establishment of such relationships is entrusted directly to the AML/CFT compliance officer. Experience shows that in some financial sector operators, these decisions come within the responsibility of the business line involving line managers and, as the case may be, a senior manager or a member of the management body (for example: when the client is a political exposed person). The AML/CFT compliance officer’s opinion can be sought on specific cases bearing ML/TF risk(s).
[…]
52. The activity report by the AML/CFT compliance officer should be proportionate to the scale and nature of the activities of the financial sector operator (**), […]
(**) It should be specified that the AML/CFT compliance officer’s activity report may be in some Member States composed of different regulatory reports due to the national competent authority.
[…]
Furthermore, AMAFI notices the EBA’s will to include the staff responsible for developing software or other tools applicable to obliged entities’ activities that are, event indirectly, sensitive to ML/TF risk in the persons to whom an AML/CFT training and awareness should be provided by the AMLCO, as they may be exposed to ML/TF risks (see Guideline 4.2, par. 62, c)). If, AMAFI understands the finality of including such staff, AMAFI wishes to suggest to the EBA to clarify the reasons for considering the extension of the scope of AML/CFT training and awareness to the staff responsible for developing software or other tools applicable to obliged entities’ activities as these persons are not traditionally included in this scope (usually targeting compliance function staff, persons in contact with customers or tasked with carrying out their transactions business / front office staffs).
1. Do you have any comments on the section ‘Subject matter, scope and definitions’?
AMAFI partially agrees with the proposed Section 2 of the draft AMLCO Guidelines.Indeed, and for educational purposes and clarity of EBA’s doctrine, AMAFI suggests adding (i) a definition of “AML/CFT compliance officer” and (ii) definitions of abbreviations used throughout the draft Guidelines (e.g. “FIU” and “STORs” abbreviations).
Concerning AMAFI’s suggestion of adding a definition of “AML/CFT Compliance Officer” concept, since it is central in these draft AMLCO Guidelines and its role and responsibilities are subject to a proper Guideline (see Guideline 4.2) which is actually the longest one in terms of description and words. Furthermore, even if there is not a proper harmonised definition of this “AML/CFT Compliance Officer” concept in EU law, the EBA could rely upon article 8 (4) (a) of the 4th AML Directive, its draft Guideline 4.2, and article 9 (3) of the European Commission’s proposal for a Regulation on AML/CFT (which in a way takes into account the operational dimension of the AMLCO definition), and the financial sector experience to propose a generic definition of it. In that sense and moreover, AMAFI wishes to suggest to the EBA to use some concrete examples of the AMLCO’s day-to-day operations / missions (precising it is a non-exhaustive list): legal watch, monitoring compliance, preparing and updating policies and procedures, reporting to the management body, reporting of suspicious transactions to the FIU, training and awareness, reporting to the national competent authority (as it is actually and partially exposed in the proposed Guideline 4.2.4.).
Then, AMAFI wishes to point out there is no definition of the “Collective Investment Sector” concept mentioned in paragraph 34 of the draft Guideline 4.2.2 (Proportionality criteria for the appointment of a separate AML/CFT compliance officer). For the same reasons stated above, AMAFI also suggests adding a definition of this concept in the Definitions provided in Section 2. AMAFI believes the definition of this concept should be based and accompanied on / of practical examples.
Therefore, AMAFI would like to propose the following changes in the Definitions provided in Section 2 of the draft AMLCO Guidelines:
Proposed amendments
Definitions and abbreviations
9. Unless otherwise specified, terms and defined in Directive (EU) 2015/849 have the same meaning in the guidelines. In addition, for the purposes of these guidelines, the following definitions apply:
Definitions
AML/CFT Compliance Officer …………………….[EU definition of “AMLCO” concept]
Collective Investment Sector ……………………..[EU definition of “Collective Investment Sector”]
Management Body […]
Abbreviations
FIU Financial Intelligence Unit
STRs Suspicious Transaction Reports
2. Do you have any comments on Guideline 4.1 ‘Role and responsibilities of the management body in the AML/CFT framework and of the senior manager responsible for AML/CFT’?
AMAFI welcomes the proposed Guideline 4.1. Nevertheless, AMAFI would like to draw the attention of the EBA on paragraph 16 (c) of the proposed Guideline 4.1.3 (“Role of the management function in the AML/CFT framework”) concerning the approval by the financial sector operator’s management body (in its management function) of the AML/CFT compliance officer’s activity report (as referred to in paragraph 52 of draft Guideline 4.2.4 on the “Tasks and role of the AML/CFT compliance officer”) and the responsibility to ensure its completeness and seriousness and accuracy. Indeed, as financial firms established in France are already obliged to report to the national competent authority different AML/CFT compliance officer’s reports which are previously approved and checked annually by the investment firms’ management body, AMAFI proposes to precise the AML/CFT compliance officer’s activity report mentioned in paragraphs 16 (c) and 52 does not supplement the already existing AML/CFT regulatory reports due to a national competent authority.AMAFI would therefore like to propose the following amendments in paragraph 16 (c) of Guideline 4.1:
Proposed amendments
16. To relation to internal policies, controls and procedures referred to in Articles 8(3) and 8(4) of Directive (EU) 2015/849, a financial sector operator’s management body in its management function should have the following AML/CFT tasks and responsibilities:
[…]
c) approving the AML/CFT compliance officer’s activity report mentioned in paragraph 52 of the present Guidelines (*), and ensuring its completeness, seriousness and accuracy;
(*) It should be specified that the AML/CFT compliance officer’s activity report may be in some Member States composed of different regulatory reports due to the national competent authority.
[…]
3. Do you have any comments on Guideline 4.2 ‘Role and responsibilities of the AML/CFT compliance officer’?
AMAFI generally agrees with the proposed Guideline 4.2 but wishes to propose some amendments.Firstly, as stated above (see AMAFI’s answer to Question 1), AMAFI suggests a definition of the “Collective Investment Sector” concept mentioned in paragraph 34 to be added in the Definitions provided in Section 2 of the draft AMLCO Guidelines accompanied with examples in order to clarify it.
Secondly, concerning the proposed Guideline 4.2.4 (“Tasks and role of the AML/CFT compliance officer”) and its subsection “c) Customers, including high risk customers”, AMAFI wishes to draw the attention of the EBA on paragraph 44. This paragraph states that “The AML/CFT compliance officer should exercise an advisory role before a final decision is taken by senior management on onboarding new high risk customers or re-classifying existing customers into the high risk category, unless the power to approve the establishment of such relationships is entrusted directly to the AML/CFT compliance officer”. However, in some investment firms subjected to EU AML/CFT regulatory framework, these decisions do not rely on and/or do not come within the responsibility of the AML/CFT compliance officer. Indeed, according to the internal organisation of some investment firms established in France, these decisions come within the responsibility of the business line involving line managers and, as the case may be (or where required), a senior manager or a member of the management body (for example: when the client is a political exposed person). The AML/CFT compliance officer’s opinion can be sought on specific cases bearing ML/TF risk(s). However, account must also be taken of the fact that in other investment firms, some French subsidiaries are not asked to provide an opinion on re-classifying existing customers into different risk categories, except for reviewing the client’s KYC. That is why AMAFI suggests precising this possible internal organisation setting in the proposed paragraph 44.
Finally, and as already mentioned above (see AMAFI’s answer to Question 2), AMAFI proposes to precise the AML/CFT compliance officer’s activity report mentioned in paragraphs 52 and 16 (c) does not supplement the already existing AML/CFT regulatory reports due to a national competent authority.
Therefore, AMAFI would like to propose the following amendments in paragraphs 44 and 52 of Guideline 4.2:
Proposed amendments
44. The AML/CFT compliance officer should exercise an advisory role before a final decision is taken by senior management on onboarding new high risk customers or re-classifying existing customers into the high risk category, unless the power to approve the establishment of such relationships is entrusted directly to the AML/CFT compliance officer. Experience shows that in some financial sector operators, these decisions come within the responsibility of the business line involving line managers and, as the case may be, a senior manager or a member of the management body (for example: when the client is a political exposed person). The AML/CFT compliance officer’s opinion can be sought on specific cases bearing ML/TF risk(s).
[…]
52. The activity report by the AML/CFT compliance officer should be proportionate to the scale and nature of the activities of the financial sector operator (**), […]
(**) It should be specified that the AML/CFT compliance officer’s activity report may be in some Member States composed of different regulatory reports due to the national competent authority.
[…]
Furthermore, AMAFI notices the EBA’s will to include the staff responsible for developing software or other tools applicable to obliged entities’ activities that are, event indirectly, sensitive to ML/TF risk in the persons to whom an AML/CFT training and awareness should be provided by the AMLCO, as they may be exposed to ML/TF risks (see Guideline 4.2, par. 62, c)). If, AMAFI understands the finality of including such staff, AMAFI wishes to suggest to the EBA to clarify the reasons for considering the extension of the scope of AML/CFT training and awareness to the staff responsible for developing software or other tools applicable to obliged entities’ activities as these persons are not traditionally included in this scope (usually targeting compliance function staff, persons in contact with customers or tasked with carrying out their transactions business / front office staffs).