EuReCA will act as an early warning tool which will help competent authorities to act before ML/TF risks crystallise, the EBA said.
The EBA (European Banking Authority) on Monday (31 January) launched its new central database for AML/CFT, known as ‘EuReCA’.
EuReCa, which stands for ‘European Reporting system for material CFT/AML weaknesses’, will be central to coordinating efforts by competent authorities and the EBA to prevent and counter ML/TF risks in the EU, the banking authority said in a statement.
EuReCA will contain information on material weaknesses in individual financial institutions in the EU that competent authorities have identified, as well as information on the measures that have been imposed on them to rectify those material weaknesses.
Examples of material weaknesses include the lack of adequate AML/CFT policies and procedures, including the absence of transaction monitoring at the group level or the absence of policies and procedures for high-risk customers.
EuReCA will also include internal audit findings identified during on-site inspections by prudential authorities, specifically those that have been left unremediated despite a financial insitution’s senior management being informed about such findings.
The EBA will use information from EuReCA to inform its view of ML/TF risks affecting the EU financial sector. It can share this information with competent authorities when appropriate, such as to support them in their supervisory processes and to highlight specific ML/TF risks or trends that emerge.
In this regard, EuReCA will act as an “early warning tool”, which will help competent authorities to act before ML/TF risks crystallise, the EBA said.
EuReCA will not start to collect personal data until the European Commission approves the draft RTS issued in December.
The draft RTS specifies when weaknesses are material, the type of information competent authorities will have to report to EuReCA, how information will be collected, and how the EBA will analyse and disseminate the information contained in the database.
It also sets out the rules necessary to ensure confidentiality, protection of personal data and the effectiveness of EuReCA.