The European Commission has recently adopted and published its latest Supranational Risk Assessment (SNRA) Report.
It assesses the vulnerability of financial products and services to risks of money laundering and terrorist financing. The 2022 SNRA re-calculates the risk levels of certain areas, such as crypto-assets, where changes have been detected since 2019 and where the risks are now higher.
The Commission published its first SNRA in 2015. The 2022 SNRA shows that most previous assessments’ recommendations have already been implemented. However, weaknesses in identifying beneficial ownership remain a considerable threat to the financial system, as anonymity remains a critical vulnerability for all sectors and activities.
The SNRA also sets out mitigating measures that the European Union (EU) and national governments should take to address these risks. It makes several recommendations, particularly that:
• Member States should fully implement the provisions set out in the Anti-Money Laundering Directive (AMLD) about beneficial ownership registers.
• Member States should ensure that their national risk assessments cover the risks associated with financial products and services, and provide appropriate mitigating measures.
• Member States should demonstrate that anti-money laundering (AML) supervisors can fully carry out their tasks.
• Encourage close cooperation between AML competent authorities, financial intelligence units (FIUs), law enforcement authorities and the private sector.
The SNRA underlines the fact that weaknesses in identifying beneficial ownership continue to remain a considerable threat to the financial system. Anonymity remains a critical vulnerability for all sectors and activities.
To address this weakness the EU states that the AML rules it proposed in 2021 will improve the detection of suspicious transactions and activities. They will also close loopholes used by criminals for money laundering or financing terrorist activities.
In view of Russian aggression in Ukraine, the SNRA states that Member States should strive to adopt as many of the measures proposed in the package as possible to ensure that beneficial ownership registers contain comprehensive information.
STEP recognises the need to implement more comprehensive reporting measures as covered by the Fifth Anti-Money Laundering Directive (5AMLD). However, it must be done in a way that is necessary and proportionate.
We continue to advocate that rigorous safeguards and robust mechanisms must be in place where information is accessible to anyone other than the competent authority.
• Read the SNRA 2022 here
• Download STEP’s Policy positions here (links to a Word document)
Robert Carington is Policy Executive at STEP