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New EBA Guidelines on the use of remote customer onboarding solutions

The European Banking Authority (EBA) published on November 22, 2022, its final Guidelines on the use of remote customer onboarding solutions by credit and financial institutions.

These Guidelines were developed in response to the European Commission's request in the context of its Digital Financial Strategy, published in 2020, which aimed to address fragmentation in the Digital Single Market for financial services. The Guidelines intend to align remote onbarding practices with anti-money laundering rules and the legal framework on personal data protection.

The Anti-Money Laundering Directive sets out what financial institutions must do to comply with their prevention obligations but does not set out in detail the rules regarding compliance with these duties in the context of remote onboarding of new customers. This created risks where regulatory expectations of lenders and financial institutions' remote onboarding practices were unclear. And it also made it more difficult for credit and financial institutions to accept new or innovative ways of identifying customers.

Regulatory divergence is an obstacle to innovation and cross-border provision of financial services; it can also create loopholes/ gaps and expose the Union's single market to financial crime. And these risks and challenges were amplified by the growing demand for non-face-to-face customer buying options during the Covid-19 pandemic.

In this context, the EBA Guidelines set out the steps that credit and financial institutions should take to ensure safe and effective remote customer onboarding practices in compliance with applicable anti-money laundering and terrorist financing legislation and the EU data protection framework.

The EBA Guidelines set out common EU standards on the development and implementation of sound and risk-sensitive due diligence policies and processes in the remote client context, notably regarding the choice of remote client onboarding tools and the assessment, suitability, and reliability of such tools in order to effectively comply with their anti-money laundering and combating terrorist financing obligations.

A distinctive feature of these Guidelines is that they are technology neutral and do not prioritize the use of one tool over another.

To access to the entire wording of EBA Guidelines on the use of remote customer onboarding solutions: Guidelines on the use of Remote Customer Onboarding Solutions.pdf (europa.eu)

For more information on this subject, please contact:
Miguel Cordeiro
mcordeiro@ctsu.pt
 

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