EU Guidance For CASPs and PSPs

Regulation Name: EU Guidelines For CASPs and PSPs

Publishing Date: 14 November 2024

Region: European Union

Agencies: European Banking Authority

The European Banking Authority (EBA) has introduced new guidelines aimed at enhancing compliance among payment service providers (PSPs) and crypto-asset service providers (CASPs) with the European Union’s restrictive measures. Released on November 14, the guidelines outline the steps these financial entities must take to ensure adherence to EU and national sanctions when facilitating fund or crypto transfers.

The EBA emphasized the importance of integrating restrictive measures into broader governance and risk management frameworks to mitigate operational, legal, and reputational risks. According to the EBA, lapses in internal controls and policies could compromise the effectiveness of the EU’s restrictive regimes, potentially destabilizing the financial ecosystem and allowing rule circumvention.

Key Requirements for Compliance

The guidelines require PSPs and CASPs to adopt reliable screening systems for detecting and preventing sanctions violations. These systems must manage risks associated with both deliberate and inadvertent circumvention of EU restrictions by individuals or entities.

By addressing weaknesses in risk management and internal policies, the EBA seeks to bolster the integrity of financial operations within the EU and minimize the possibility of sanctions breaches.

Legal Framework and Timeline

The guidelines align with the EU’s 2021 legislative reforms to combat money laundering (AML) and terrorist financing (CFT). This reform package introduced new regulations for information-sharing in fund and crypto transfers, adopted on June 9, 2023. While these rules come into effect on December 30, 2024, the EBA’s guidelines will become applicable from December 30, 2025.

Through these measures, the EBA aims to ensure that financial institutions, including PSPs and CASPs, operate within a secure and compliant framework, reducing risks to the EU’s financial stability.

Read the details here.

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