On 5 January 2022, the European Banking Authority (EBA) published its opinion and report on the scale and impact of de-risking in the EU and the steps competent authorities should take to tackle unwarranted de-risking. Providing access to at least basic financial products and services is a prerequisite for the participation in modern economic and social life and de-risking, when undue, can cause the financial exclusion of legitimate customers. It can also affect competition and financial stability.
De-risking refers to decisions taken by financial institutions not to provide services to customers in certain risk categories.
To assess the scale and impact of de-risking across the EU and to reach a better understanding of the reasons behind de-risking decisions, the EBA reached out to the relevant competent authorities across the EU and external stakeholders. The EBA’s findings suggest that de-risking has a detrimental impact on the EU financial stability and affects the fight against financial crime and financial inclusion.
The EBA suggests that:
• The EBA’s regulatory guidance on how to manage money laundering (ML)/terrorist financing (TF) risks should help avert undue de-risking;
• the European Commission and co-legislators should take further steps to improve the current framework;
• Competent authorities should engage more actively with institutions that de-risk and with users of financial services that are particularly affected by de-risking, so as to raise mutual awareness of their respective rights and responsibilities;
• The European Commission should clarify the interaction between anti-money laundering (AML)/countering the financing of terrorism financing (CFT) requirements and the right to open and use a payment account with basic features in the Payment Account Directive (PAD), and take advantage of the forthcoming review of the Payment Services Directive (PSD2) to ensure more convergence in the way payment institutions access credit institutions’ payment accounts services.