The EBA consults on Guidelines on internal policies, procedures and controls to ensure the implementation of Union and national sanctions

EBA has launched a public consultation on two sets of guidelines aimed at enhancing internal policies, procedures, and controls to ensure the implementation of Union and national restrictive measures. These measures, which encompass financial sanctions and embargoes, are binding on individuals and entities within Member States. The guidelines seek to establish a common understanding among PSPs, CASPs, and their supervisors, with the overarching goal of ensuring compliance with restrictive measures. The consultation period is set to conclude on 25 March 2024.
The initiative addresses identified weaknesses in internal policies, which expose financial institutions to legal and reputational risks, as well as the potential for significant fines in case of non-compliance. Such vulnerabilities also pose a threat to the effectiveness of the EU’s restrictive measures regimes, allowing for potential circumvention and undermining the stability and integrity of the EU’s financial system.
One set of guidelines is specifically directed at financial institutions and prudential supervisors. It outlines common regulatory expectations concerning the role of senior management, internal governance, and risk management within the context of restrictive measures.
Another set of guidelines is tailored for PSPs and CASPs, focusing on their compliance with restrictive measures during transfers of funds and crypto-assets. This includes an emphasis on aspects such as KYC, screening, and due diligence.
The regulatory basis for these guidelines stems from a legislative package issued by the EC in July 2021. Notably, Regulation (EU) 2023/1113 mandates the EBA to issue guidelines related to internal controls for the implementation of Union and national restrictive measures. These guidelines, by the EBA, aim to provide clarity and consistency in addressing wider internal controls and risk management issues, ensuring effective compliance across financial institutions operating within the EU.