Credit institutions and investments firms will need to meet new fit and proper AML knowledge requirements as of 31 December 2021. The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) recently published joint guidelines on how these entities should assess the suitability of management board members and key function holders in accordance with the Capital Requirements Directive (CRD IV) and the Markets in Financial Instruments Directive (MiFID II). The revised guidelines provide that the suitability assessment should at least address whether the person in the management board who is responsible for AML implementation, has the required knowledge, experience and skills. The joint guidelines also contain a suitability requirement for the collective management body.

Suitability assessment includes AML knowledge

The revised guidelines underline that every credit institution or investment firm must identify a member of its management body who is responsible for the implementation of rules to comply with the Anti-Money Laundering Directive. In addition, also as a result of the newly issued EBA guidelines on internal governance, all members of the management body have responsibility for the identification, assessment and management of AML/TF risks. As a consequence,the ability to understand AML/TF risks is part of the assessment of the collective suitability of the management body members and the assessment of key function holders. This implies that directors and members of the supervisory board, before undergoing, the required fit and proper testing, should be prepared for an assessment on AML/TF.

Obligations under Dutch AML legislation

The implementation of the directive has made it compulsory for financial institutions to designate and charge one of the policymakers with overseeing compliance with Dutch AML legislation. This legislation already provided that institutions must ensure that their employees and policymakers (i) are familiar with its provisions, (ii) are screened and (iii) regularly receive training. The revised EBA and ESMA guidelines go further and set out principles on the assessment of risks triggered by AML/TF factors during the assessment of suitability of management board members. Competent authorities must demand AML/TF knowledge, experience and skills as a prerequisite for those members.

This In context article will be followed up by an in-depth overview of and our insights on the new AML requirements later on this summer. For further information, please contact Birgit Snijder-Kuipers and Paulien Makkinga at our AML Practice Group.