The European Banking Authority (EBA) has published two significant sets of Guidelines on internal policies, procedures, and controls for the implementation of Union and national restrictive measures. These Guidelines, issued on 14 November 2024, represent a major step towards harmonising compliance expectations across the European Union, addressing longstanding inconsistencies in the way financial institutions manage their sanctions obligations.
The first set of Guidelines applies to all financial institutions within the EBA's supervisory remit. It establishes a framework to ensure that governance structures, internal controls, and risk management systems are sufficiently robust to address risks associated with breaches or circumvention of restrictive measures. These Guidelines emphasise the importance of conducting regular assessments of exposure to restrictive measures and tailoring compliance processes proportionately to the size, nature, and complexity of the institution.
The second set of Guidelines focuses on payment service providers (PSPs) and crypto-asset service providers (CASPs). It provides targeted measures to prevent funds or crypto-assets from being made available to designated persons or entities, highlighting the need for reliable screening systems and thorough transaction monitoring. The Guidelines also stress the importance of managing risks related to circumvention of restrictive measures through proactive due diligence and ongoing updates to compliance systems.
The EBA issued these Guidelines under the mandate of Regulation (EU) 2023/1113, which requires clear internal processes to ensure compliance with sanctions when transferring funds or crypto-assets. In addition, the Guidelines reflect the EBA's own initiative to address broader issues of governance and risk management within financial institutions, supporting a unified and effective implementation of restrictive measures across the EU.
Non-compliance with restrictive measures can have severe legal, financial, and reputational consequences for financial institutions, undermining the stability and integrity of the EU's financial system. The introduction of common standards through these Guidelines is expected to mitigate these risks by providing clarity and consistency for institutions and their supervisory authorities.
The Guidelines will come into effect on 30 December 2025, allowing institutions sufficient time to adapt their policies and systems. The EBA's initiative reflects its commitment to strengthening the EU's regulatory framework for sanctions compliance while supporting financial institutions in navigating complex compliance landscapes.
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