EBA Finds Significant Progress in EU Banks’ Anti-Money Laundering & Counter-Terrorism Financing Supervision

The European Banking Authority (EBA) has reported substantial improvements in how EU and EEA Member States supervise banks for money laundering and terrorist financing risks, marking the conclusion of a six-year review project.

In a report published on 8 October 2025, the EBA said that competent authorities have made “significant progress” in adopting risk-based approaches to anti-money laundering and countering the financing of terrorism (AML/CFT) supervision, even as many grappled with resource constraints and reform challenges.

Between 2018 and 2024, the EBA carried out in-depth reviews of 40 national competent authorities (NCAs), examining their strategies, supervisory practices, and use of tools to combat money laundering and terrorist financing (ML/TF). These reviews led to targeted recommendations, and the final stocktake shows widespread adoption of risk-sensitive supervisory frameworks.

Most NCAs now have dedicated AML/CFT strategies, supervisory plans, and manuals designed to ensure consistency. Supervisors have also become more strategic in deploying the full range of supervisory tools available to them. However, the EBA noted that in several jurisdictions, work is still underway to fully address earlier recommendations.

Strengthened Cooperation and Information Exchange
The report highlights improved cooperation within Member States, particularly among NCAs, financial intelligence units, tax authorities, and other public bodies with shared oversight responsibilities. Progress was also observed in cross-border cooperation, with many NCAs implementing more robust communication channels with their counterparts in other EU states and with third-country authorities.

Yet gaps remain. Nearly half of NCAs still face challenges in developing effective cooperation with prudential supervisors, and some Member States have further work to do in refining domestic cooperation mechanisms.

Challenges and the Road Ahead
Despite notable advances, reform efforts were hampered by staff shortages, budget constraints, and, more recently, the reallocation of supervisory resources to handle new EU restrictive measures. Nonetheless, the EBA concluded that the effectiveness of AML/CFT supervision and cooperation has improved overall, laying the groundwork for the upcoming EU Anti-Money Laundering Authority (AMLA).

The EBA’s findings provide AMLA with an up-to-date baseline of supervision across the EU, forming the foundation for its indirect supervisory role once it assumes responsibility under the new EU AML/CFT framework.

The reviews were conducted under Articles 1, 8(1), 9a and 29(1) and (2) of the EBA Regulation, which tasks the EBA with ensuring consistent supervisory practices and preventing the misuse of the EU’s financial system for illicit purposes.

The report also feeds into the transition to the EU’s new AML/CFT package, which will bring more standardization to risk assessment and enforcement across Member States. This final handover from the EBA to AMLA aims to strengthen Europe’s defenses against financial crime at a time of heightened regulatory scrutiny and global risk.

Article Credit: https://www.grcreport.com/post/eba-finds-significant-progress-in-eu-banks-anti-money-laundering-counter-terrorism-financing-supervision