CSSF AML/CFT update
A detailed update on the AML/CFT regulatory scene was the topic of an interview between Guilhem Ros, Head of the UCI AML Department at the CSSF, and Birgit Goldak of PwC.
What is an AML college?
Mr Ros began by describing AML colleges, the permanent structures created by the EU in 2019 to enhance cooperation and information flows between National Competent Authorities in charge of AML/CFT (AML NCAs). The criteria to set up these colleges of AML NCAs are defined in ESA guidelines, the AML authority in the country of the head office usually takes the lead. A mapping of financial groups is performed by AML NCAs to determine whether they meet the above-mentioned criteria. Once set up, a college is composed of permanent members (the AML NCAs with the Head Office, its branches and subsidiaries) and observers (e.g., the Financial Intelligence Unit). The work of the Colleges focuses on assessing whether the AML/CFT framework at the level of the Group is deemed sufficient based on the inherent ML/TF risks faced. In 2021, the CSSF participated or lead 35 AML colleges in the Collective Investment Sector.
“As board members, some of you are the RC or the RR, so could be invited to participate, usually through WebEx to present to the other AML NCAs your AML governance standards, your AML projects and the technologies that you use, in particular when it comes to your oversight over your branches and subsidiaries,” said Mr Ros. He added that while AML colleges can last a full day, the session with the company’s presentation is usually one hour. He noted that usually the Conducting Officer in charge of AML/CFT, the RR and RC are usually the persons invited. However, voluntary participation of board members usually sends a strong signal to the other NCAs to show the buy-in of Senior Management in AML/CFT matters.
Regulator’s reactions
“I haven’t yet seen an injunction letter or something like that resulting from these AML colleges in the Collective Investment Sector” said Mr Ros. “Participating should be quite neutral for you in terms of additional workload, other than the time to make your presentation,” he added.
As to what is discussed by the AML NCAs when they are on their own, Mr Ros mentioned risk scoring of branches and subsidiaries, discussions about outcomes of supervisory measures, and the exchange of best practices. Sometimes combined supervisory measures performed by more than one NCA result from these colleges. Occasionally there has been the need to escalate to the EBA. “It’s the start of supervisory convergence for AML,” he said, with a risk-based approach being at the heart of this. He noted how there are regular meetings between supervisors outside of this framework to discuss different methodologies and findings.
Outcome of the first campaign of the CSSF circular 21/788 (AML/CFT External report)
He expressed his satisfaction with the process and outcome of the recent AML audit of investment fund managers. “We got good results and good buy in from the industry. We wanted to ensure that there was a level playing field, and an aspect that was appreciated by the industry is that this took the subjectivity out of the matter,” he said.
The CSSF is analysing the data with IT tools to offer risk-based insights and observations. “We are going to use this first to provide additional guidance to the market in areas where there might still be some confusion” he said. In parallel, a more in-depth analysis of each report is performed, which may lead to actions by the CSSF such as observation letters in which IFMs’ Senior Management may be asked to provide or prepare remediation plans of identified shortcomings.
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The interview finished with a reminder of up-coming AML deadlines. Mr Ros also suggested that directors double check that their firms’ have their LuxTrust and e-Desk data up-to-date, noting that these details can often be overlooked.